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Don’t be afraid to ask the “dumb questions” when shopping for an energy plan. It can save you a lot of stress down the road.
If you live in a a country whose energy is deregulated, this means you have the option to choose where your electricity or gas comes from. But shopping for an energy plan can be a little tricky if you don’t know what to look for — or the right questions to ask energy supplier. Doing a little research beforehand can help lower rates and help you spot some red flags, such as hidden fees and rate hikes. Before choosing your energy plan, you’ll want to ask the provider a few key questions to make sure you’re getting a good deal with a reputable company.
Costs are probably the first reason deregulation is attractive, Robert Brookesenior vice president and managing director of Neara, a power utility software company, told CNET. I think the second reason is personal preference for one type of electricity over another.
We’ll help you find the best electricity rates in your area
Here are the questions you might want to ask these energy companies.
Why shop for a new energy supplier?
In most states, energy utilities are regulated monopolies — acting as a supplier — having no choice in where your energy comes from and how much it costs. There is 18 deregulated US states where residents have a choice of which electricity or natural gas providers to sign up with. The two biggest reasons people shop or switch are to get a lower price or because they care about renewable energy.
We’ll help you find the best electricity rates in your area
Potential cost savings
If you live in a deregulated energy market, not only can you choose your energy supplier, but you can also shop for cheaper electricity prices and how long you want to lock it for.
“Having a deregulated market is great because it gives the consumer choice.” Christine Civardinicustomer relations manager MD Energy Advisors, told CNET. “It improves competition, and when you don’t have competition, you have really tight pricing and limited options for the consumer.”
There are also options for those who want to support clean energy. Most electricity suppliers offer plans where some (or all) of the energy supplied to your home comes from renewable sources such as sunnywind or hydroelectric.
How to shop for the best energy supplier
When it’s time to look for an energy supplier, talk to neighbors and friends in your area to see if they have recommendations or companies to avoid. Ask them if they are happy with the rates and terms they are getting and if there is anything they would change. You can also read online reviews to spot any immediate red flags.
Ciavardini recommends searching your state’s public utility commission website, which may offer information on some of the more reputable providers in your area. This may also help you compare your options.
“You don’t want to be in a situation where [sign a] contract with somebody who’s less reputable or you’ve never heard of, and then all of a sudden they’re out of business or something,” she said.
7 questions to ask your energy supplier
Doing a little research beforehand can save you even more than a little stress later. When evaluating energy plans, it’s important to understand the rates, fees and contract terms. Don’t sign up for a plan unless you fully understand what you’re getting yourself into. Here are some questions to ask your energy suppliers to make sure you’re getting the best value.
1. What is the plan rate?
The electricity tariff is the most important thing to consider in the energy plan. Get all the details about what you’re paying and how much before you sign anything. Make sure you know the length of the contract as well. You don’t want to be locked into a rate you don’t like for a long period of time. A low introductory price can only be good for so long before the price jumps up.
“If it seems too good to be true, it probably is,” Brooke said. “Some organizations will offer you an upfront price cut to get you into a contract, but if you don’t read the fine print, you’ll find yourself tied to that provider for a longer period of time.”
2. Is this a fixed interest rate or variable?
Your electricity rate or will be fixed or variable. A fixed interest rate remains the same over time. Variable rates may vary by market. While it’s easier to predict what your energy costs will be on a fixed rate plan, a variable rate plan can provide you with a lower price during fluctuating costs.
Your energy percentage can change for a variety of reasons. Demand, time of year, and utility cost adjustments are just a few reasons. Consider your energy needs and budget carefully when choosing between these types of tariffs.
3. How long does this rate last?
The right energy plan can make budgeting your energy costs a little easier. Some providers’ rates change monthly or quarterly, which can make it difficult to budget for future utility bills.
“One of the reasons you shop is to lock in a rate for a period of time,” Civardini said. “It can range from six months to 48 months or even 60 months, so you can get that budget security for the very long term.”
Similar to shopping for an internet plan, your energy supplier may offer a promotional price for new customers or switches. These low promotional prices may look good on paper, but they may only last for a few months. Make sure you understand the actual price you’ll be paying after the promotional period ends.
4. What are the charges associated with the plan?
Ask prospective energy providers about any fees or charges associated with the energy plan, such as basic fees, monthly flat fees, usage threshold requirements, enrollment fees, early termination fees, or meter reading fees.
If you want to get out of your current plan before the contract expires, you’ll likely have to pay an early termination fee. This can be a simple flat fee or a fee based on how many months are left on your contract. Be sure to check that you know your plan’s early termination fee before committing to anything long-term.
“Look for early termination and automatic renewal language,” Ciavardini says. “Do you get penalized if you end your contract before it expires?” Does the contract automatically renew? You may find yourself in a situation where suddenly your great rate expires and you pay a much higher price. Verbosity in contracts really matters.”
If you’re a renter or homeowner planning to rent or sell your home in the near future, you’ll want to consider the length of the agreement to avoid potential fees.
“You’re signing a long-term contract, and if you’re renting a property or planning to sell your property, you might be signing a contract that lasts longer than you plan to be somewhere,” Brooke said. Don’t forget to also ask your potential energy supplier if they have a ‘relocation clause’ where you can win an early termination fee waiver due to moving or changing addresses.
5. Is a deposit required?
Some energy suppliers or utility companies may require a deposit when you sign up for a service, usually as a guarantee against non-payment. Deposits may apply to customers who do not meet certain credit thresholds or have a history of unpaid utility bills.
6. Does the plan include renewable energy?
Show support for renewable energy in the market is a great reason to shop. You may even be able to choose from a variety of renewable energy sources. However, clean energy providers sometimes have higher rates.
“Deregulation gives you the opportunity to run a generator that produces green energy,” Brooke said. “If you use a renewable energy supplier, they have a certificate that says they supply a certain amount of renewable energy to the grid.”
Brooke said just because you’re buying renewable energy doesn’t mean the actual energy going through your home is necessarily from that source. Rather, paying a small premium means you’re helping to bring more green energy to the grid.
7. What happens if I miss a payment or have payment problems?
Before signing a contract with an energy supplier, make sure you understand the consequences of a missed payment. Ask about any payment assistance programs that may be available. Sometimes your provider will have options to defer payments in case of financial difficulties.
What to do if you sign up for a bad deal?
The best way to protect yourself from getting stuck with a bad deal is to do your research beforehand. Read the fine print in terms of service or electricity facts labeland ask questions in advance to verify the supplier. Knowing your electricity tariff and recurring charges are the most important things to understand before you sign. Also check for any early termination and meter reading charges.
You do all this research in the hope that you won’t end up with a bad deal, Brooke said. “You’ve signed an agreement, and there’s probably going to be some pain involved in getting out of it.”
If you can’t resolve a problem directly with your energy supplier, review your contract to see what your early termination options are. If you believe you have been misled or suspect you have been defrauded, contact your state energy regulatory agency or consumer protection bureau to I file a complaint.
Frequently Asked Questions
Can I save money by switching energy suppliers?
Change supplier it can save you money if you find a plan with lower prices or better terms. Compare different offers and consider details such as contract length, rate structure and fees to ensure you make the right choice.
Are the energy suppliers legitimate companies?
Most energy providers are legitimate businesses licensed to operate in their respective countries. But not all of them are reliable. Research the reputation and credentials of an energy provider before signing up for their services. Your state’s public utility commission website is a good place to find reputable suppliers.
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