8 Factors to Consider When Choosing an Electricity Provider

Text: Electricity Plant | Background Image: Night view of a electricity Plant

Energy deregulation has given people in some states an opportunity to choose between electric companies. That can be exciting for those looking to save money on their energy bills. But what should you keep in mind as you’re making your choice? This article will discuss eight factors to consider. 

Table of Contents

Reasons to Switch Electricity Providers

Energy choice gives you the right to choose where you or your utility company purchases your electricity. But does it matter where your electricity comes from? The answer is yes, and the biggest reason is cost. 

Different providers have different prices for generating electricity that they pass on to utility companies. Utility companies factor that cost into the amount they charge customers every month. Simply put, if your electricity can be generated for less money, you will pay less for it. 

What to Consider Before Switching Your Electricity Provider

Choosing an electricity provider can provide you with several benefits. However, not every company offers the same rates or benefits. It’s vital to understand and consider the following factors when choosing a new provider. 

1. Your Current Energy Costs

Text: Eelectricity Meter | Background Image: Electricity Meter showing reading
Photo by: Unsplash

Before switching to a different electricity provider, take a look at what you’re currently spending on your electricity bill. The utility company will list a “price to compare,” which is the average cost per kilowatt-hour you are currently paying. This price is usually found on your bill or on the utility company’s website. Does that amount fit your needs and expenses? If not, consider what you’d instead like to pay, and look for a provider that can get you closer to that number. 

Your electricity bill is broken down into three parts: supply, distribution, and taxes/fees. The supply is the cost to generate the electricity, while distribution is the cost to deliver the energy from the generation source to your home or business. The supply is typically the highest portion of your bill. However, it is the portion over which you have the most control, meaning it’s very important to pay attention to this cost.

2. The Provider’s Reputation and History

Thanks to deregulation, there are many energy providers to choose from. Normally, having multiple options is a good thing. However, not every electricity provider operates professionally. 

Before settling on a provider, perform a thorough check of their ratings and reputation online by looking at their social media pages or websites that gather reviews for quality control. Confirm whether the company has historically delivered what it promised or left a string of complaints from disgruntled customers in its wake. 

3. Types of Plans Offered by the Electricity Provider

Electricity costs are broken down into three different types of rates. 

  • Fixed-rate plans offer you a steady rate that doesn’t fluctuate with the energy market. You will be “locked in” to your rate for the length of your contract. Fixed-rate plans are good if you mostly use electricity during peak hours when it’s the most expensive. 
  • Variable-rate plans shift up or down depending on the energy market. What you pay per kilowatt-hour can change monthly, and this plan does not come with a minimum contract period. With this type of plan, you could potentially benefit from lower bills during peak periods and certain times of the year. 
  • Hybrid plans offer a combination of fixed and variable electricity rates. The exact configuration of this combination varies between different providers, so be sure to understand precisely what the plan entails before making your decision. 

4. Length of Your Plan

In addition to different electricity rates, every plan has a different length. Some are short-term, only lasting month to month or quarterly, while others are long-term, lasting for one or several years. Short-term plans tend to have higher rates than long-term plans, but you don’t have to stick with the provider for as long.

5. Fees, Taxes, and Other Expenses

Some companies charge their customers an early termination fee for switching providers before a certain length of time. You should check both your current energy plan and the plan you are considering before canceling your service. It wouldn’t be ideal to switch energy providers for a lower rate only to face a hefty penalty. 

Also, consider any service fees, energy usage fees, or taxes that are presented with your electric bill. Even if a provider charges a lower rate, the various fees and taxes could equate to a higher bill in the long run. 

6. The Customer Service Experience

If there is ever an issue with your electricity that needs to be resolved by the provider, it is imperative that the problem be addressed immediately. So, customer service can be one of the most important factors in determining your provider.

Ensure that the provider’s customer service is available 24/7. You can run a test by calling a prospective provider’s customer service line to ask questions. Pay attention to how quickly they get back to you and the way they communicate with you to determine whether their service is a good fit.  

7. Type of Energy Offered by the Provider

With emerging technologies and advances in energy generation, it’s easier than ever to switch to renewable energy sources. If you are looking for more green energy, consider whether the provider offers it. If they do, compare the price of it to what you’re currently paying for your electricity. 

8. Incentives and Introductory Packages

Some electricity providers offer different incentives to customers to get them to switch over. These include a lower rate for your first month or discounts for a certain amount of energy usage. You may save even more money or find a better deal than you hoped by taking advantage of some of these incentives.

What Stays the Same When You Switch Electricity Providers?

The amount you pay for your electricity may change when you switch providers. However, choosing a new company to provide you with electricity can bring up several questions about what else may change with your rate. If you switch electricity providers, the following will remain the same:

  • Your current utility company will continue to deliver the electricity, maintain any equipment, and respond to power outages.
  • There will be no physical alterations to power lines, transformers, your meter, or any other equipment related to delivering electricity to your home or business.
  • There will be no changes or interruptions in your electricity service. 

Frequently Asked Questions

Will the electricity provider bill me along with the utility company?

No. You will continue to receive one bill from your utility company. Any changes to the rate you pay for your electricity will be reflected in this bill. 

Can anyone choose a different provider for their electricity?

As of this writing, fewer than half the states have deregulated energy markets. These are the areas where customers can choose a provider. 

The Final Word

Paying a lower or more stable rate for your electricity or natural gas is a significant benefit and one of the key factors in deciding who will provide your energy supply. By choosing your electricity provider, you can take greater control over your utility costs while gaining peace of mind. Be sure to research any new provider thoroughly and make the choice that best fits your needs. 

Main Photo by: Unsplash

Nick Crawford

Nick Crawford

Nick Crawford is a blog writer based in Philadelphia. He enjoys writing just as much as he enjoys reading a good book, cooking, and working out in his spare time.