The Internet has made it easy to shop for anything these days, and that includes electricity and gas service. It’s a commodity that many people don’t shop around for because the concept of doing so is fairly new.
Up until the early 2000s, many energy markets were regulated and some are still that way today. In a regulated energy market, consumers don’t have a choice in who provides electricity and gas. There’s no need to shop around because only the local utility supplies energy for a single, approved rate.
Everyone else who lives in deregulated markets is able to shop around to find the best energy plan for their needs and budget. Below are some tips that can help you do just that.
Rule #1 – Always Compare Energy Plans
Not long ago, the Houston Chronicle published an article that noted Texas residents can save as much as $500 a year by shopping around and comparing energy plans. Too often, people simply stick with the plan they already have, but that can be very costly. If consumers knew how easy it was to compare energy plans and switch suppliers millions would be saved collectively.
There are a number of resources for comparing current energy plans from various suppliers side-by-side. Just search for energy plan comparisons in your state, and you’re sure to find a few, including resources run by the state government. In a matter of minutes, you can narrow the list down to three or four to plans based on rate, contract term and more.
It’s best to then visit the supplier websites to get specifics on each plan before making a final decision. Make sure to read the Electricity Facts Label (EFL) for a better idea of the cost based on usage.
At Spark Energy, we provide all the information you need upfront. All you have to do is sign up for an energy plan online or over the phone and we’ll handle the rest. Our team will contact your current energy supplier to notify them of the switch and there shouldn’t be any service interruption.
Know How Much Energy You Use on Average
After analyzing energy plans you’ll quickly see that the rates usually change once you hit a certain amount of usage. The advertised rate could be for the first 300 kWh. Anything beyond that could be dramatically higher. In that situation, if you normally use 500 kWh a month usage could have a profound effect on your monthly bill.
Knowing how much energy you use on average is the only way to accurately estimate the cost of a new plan. You can find this information on past utility bills. Most suppliers will provide energy use data for the last 12 months.
Know When You Use the Most Energy
Today, many suppliers offer what’s known as time-of-use plans. This means the rate changes based on the time of day. Typically, the rates are higher than normal during peak demand hours and lower than normal during off-peak hours.
Whether or not this is the best type of energy plan depends on when you use the most energy and whether you can make adjustments. If you find that you’re rarely home during peak hours then a time-of-use plan should be cost-effective. However, if you or others in your household regularly consume energy during peak times it could end up being more expensive.
Know the Current Average Energy Rates
The only way to know if a supplier’s rate is truly a good one is to understand how much energy costs on average. This is sometimes easier said than done because energy rates are always fluctuating. The average electricity and gas rates last year could be higher or lower than the current average.
One reliable source of information is the Energy Information Administration (EIA). The EIA regularly posts average electricity rates by state in cents per kilowatthour. The breakdown includes a year-over-year comparison as well. The administration also provides residential and commercial rates for natural gas.
This information can be used as a benchmark, but each local energy market is unique. It’s possible that all the energy plans in your market are below the state average, or the opposite could be true.
Check Your Current Contract for a Termination Date
Are you still under contract with your current supplier? If so, you can still switch suppliers, but you may have to pay an early termination fee if the switch is made more than 14 days before the contract is up. The contract date information should be included on your energy bill.
You may need to run some numbers to determine if paying a termination fee is cheaper than what you’d save on electricity and gas from another supplier. For instance, if the termination fee is $30 and there’s still three months left on your contract it’s better to pay the fee if you can save $15+ a month by switching.
Consider the Contract Term Length
Rates are easily the most important factor for energy shoppers, but term length is also important for two reasons. The first is mentioned above. If you end your contract early you may have to pay an early termination fee. The second reason term length is important is because it locks in a rate for a specified amount of time.
As noted above, rates fluctuate. If you find that a fixed-rate plan has a great rate that might go up you can secure it for an extended period of time to save money and have more stability in your monthly expenses.
If you want to avoid a contract altogether, a variable-rate plan is worth considering. These plans typically don’t require a contract, but the rate can change from month-to-month based on the market price.
Check the Energy Supplier’s Credentials
Energy suppliers aren’t created equal. Some are much more reliable and well-established than others.
First and foremost, check with the state public utility commission (or the equivalent) to make sure a supplier is licensed to operate if you’re unsure. It’s also important to read customer reviews to get a better feel of the type of service you can expect.
Spark Energy has been in business for over 20 years serving energy markets across the country. You can count on us to provide a great selection of affordable energy plans and reliable service that’s second to none.