Today, we have more options than ever when it comes to power suppliers thanks to the movement toward deregulation across the U.S., a move nearly half the country has adopted thus far. With all these newfound choices comes an increased need among consumers to understand the options on the table. The following article covers things to know before you switch energy suppliers.
If you notice your energy bills have risen with your current utility, it could be time to switch to a new supplier. If you see a lower offer available to residents in your area, you could probably save money by changing suppliers. However, if you have been with the same utility for years, and you feel reluctant to change services, it could help to understand how the process works.
Some residents fear that if they change suppliers, their costs will go up after a sweetheart promotional period. Fortunately, most suppliers in the newly deregulated market are transparent in their pricing policies. The highly competitive nature of the supplier market has spurred this transparency because various companies compete for residential customers in the same area.
At Shipley Energy, we believe in removing this problem altogether, and have introduced what we call “Worry-Free Renewal.” Worry-free renewal is a feature we created allowing our customers to elect to always renew to a fixed rate. This removes the worry of being rolled to a variable rate and seeing a price spike in your bills.
Another fear some residents have about switching suppliers is the possibility of losing their energy for a brief period during the changeover. Fortunately, these imagined breaks in service do not occur when you switch from one provider to another. The transition is seamless, and it doesn’t even require a visit to your property from an energy service team.
While energy deals are available all year long, the best time to change energy suppliers is when demand is low, as this leads to lower introductory prices.
Energy prices tend to be highest during peak-demand times due to the scarcity of available energy during such periods. When consumption of energy peaks in a given area, the local utilities will often have to resort to secondary sources of energy to meet customer demand.
In Texas, for example, utilities will often supplement the supply grid with fuel from coal plants, since the normal natural gas plants are not sufficient in these peak-demand periods. However, coal plants are more expensive for energy sourcing. The scarcity of energy and the increased cost of secondary energy sources add up to higher energy bills for consumers during peak demand times. Peak time periods can be avoided by selecting a fixed rate from an energy supplier during the more temperate months of the year when energy demand is low.
Energy demands are generally at their highest during the months when temperatures are at their most extreme. Through most of the U.S., this results in higher energy costs during the summer and winter seasons, especially the months of July, August, December and January. During these months, people’s heavy reliance on heating and cooling systems fuels demand. During hot summer months, residents typically have air conditioners running all day and sometimes throughout the night. When subzero temperatures hit, residents have their heating systems running on high, around the clock.
For lower prices, the best times of year are spring and fall, when temperatures are usually on the more moderate end. During these months, residents rely less on their heating and cooling systems. The lower demand during spring and fall takes the issue of scarcity off the table. It makes suppliers more competitive for customers and willing to offer deals at lower prices during months with moderate weather. Overall, the best weeks to switch suppliers are between late September and Halloween, and between late March and early May.
Thanks to the power of the internet, it is now easier than ever to figure out how to change energy suppliers. Better yet, you can search and compare prices between competing suppliers and see how your neighbors rate each. The internet also makes it easier to learn all about a prospective supplier and contact the company on the spot. Within minutes of first deciding to switch from your old utility to a new supplier, you could ultimately find the right deal and initiate your new customer account.
The easiest way to find suppliers that serve your area is to search by ZIP code. In Pennsylvania, for example, the site PAPowerSwitch features a search box where you can enter your ZIP to bring up all the competing companies that supply energy from your local utility. Right now, you can check plans and pricing for Electric, Natural Gas, Heating Oil, or Propane conveniently on our site, to take control of your energy costs.
Once you see the list of options for your area, compare the quotes and terms of service until you find the best offer. Next to the name of each supplier will be the basic stats of that company’s pricing, fees and terms.
Before you decide on an energy supplier, make sure the company has proper licensing for your area. Suppliers in Pennsylvania must have received licensing from the state’s Public Utility Commission, also known as the PA PUC.
Make sure the initial quote you see from a prospective supplier will save you money over your current utility. Does the offer represent the total monthly price for the length of the contract? If not, would the additional fees and hikes exceed your current monthly bills? If you have not yet done so, this would also be a good time to learn more about the various fees that comprise the monthly bills from your current utility. By understanding these billing details, you can become a more discerning shopper of energy offers.
Once you understand all the details and have selected your favorite offer, you can switch to the new supplier by contacting the company online or via phone to speak with one of their service representatives. The supplier, in turn, will notify your electric utility of the change in service. You will then receive a notification in the mail from the utility that verifies the switch. Beware of any cancellation fees that may apply if you switch suppliers before the end of an active contract.
If you plan to switch to a new energy supplier, you must first know how and where to find the best rates and services for homes in your area.
The first thing to understand about energy suppliers is how the power grid works between points A and D. At point A, you have the producers, or the organizations that produce power for the public. Producers transport that power to party B, the utilities, which send that power over the grid, making it possible for energy to make its way into homes across a select area. With the power on the grid, party C comes into play. These are the suppliers, which are the companies that sell power to party D, the consumers.
As a residential power customer, you would deal directly with the supplier each time you pay your bills or change services. In the newly deregulated market, suppliers can shop around for the best deals on energy from the power utilities. These suppliers can compete with one another to offer the best prices to consumers. It represents a huge win for you, the customer, because you can find lower rates than those offered by the old centralized, regulated suppliers.
Each month when you pay your electrical bill, the total amount listed on that bill is the combination of two different expenses: the supply fee and the distribution costs. The supply fee is the amount your supplier charges you for the energy they provide to your residence. The distribution cost accounts for the expenses attached to the distribution of energy – the physical movement of electricity or natural gas – between parties A, B and C.
For most customers, the costliest part of a typical electrical bill is the portion that accounts for the supply fee, as that is how most suppliers make their money. Therefore, to get the best deals on electricity, you must shop around and compare quotes between the different suppliers that service homes in your area. Throughout Pennsylvania, where homeowners have embraced deregulation, numerous residents have been able to slash their monthly bills by switching from a pre-existing supplier to a new competitor that offers lower rates.
Even in a deregulated market, residents can opt to forgo suppliers and purchase electricity directly from the utilities. However, there are risks involved with this option. If you choose to purchase electricity from the utility that serves your area, you will be subject to price fluctuations in the energy market. If the market price of energy increases at any point during the year due to circumstances beyond anyone’s control, your rates could go up unexpectedly.
By contrast, you can generally save money regardless of world events when you purchase electricity from a supplier, thanks to the options most suppliers offer residential customers, such as fixed-rate pricing. When you opt for a fixed rate, your rate will remain the same for the length of the contract. Your rate will remain unchanged from the date you sign the contract through its term length, regardless of price fluctuations.
Fixed or capped rates are also an option for users of natural gas, heating oil, and propane fuel. Considering the often volatile nature of the market, this is generally a wise option to take. Due to political unrest in the Middle East, oil prices can spike at any time. You might sign a contract with a propane supplier at the start of the year, only to see your prices go up after some act of war that sets the market on its edge. With fixed-rate pricing, you can lock in your rate as originally quoted and spare yourself from unpredictable price hikes during the following year.
A new deal on energy could help you go easier on your bank account and the environment at large. If you switch energy suppliers, you could reap the following benefits.
When you switch to a new energy supplier, you could gain significant savings on your monthly heating and cooling bills. Over a given year, these savings can add up to hundreds of dollars. If you have stayed with the same provider for many years, you might be paying a whole lot more for electricity than you otherwise would if you shopped around for a better deal. While the old, centralized utilities have had little incentive to adjust their prices for long-term customers, competitive suppliers are always reaching out to homeowners just like you with deals that could amount to huge savings.
If you have stayed with the same utility for many years, you might pay your monthly bills arbitrarily without knowing the specifics of the various fees that add up to the final amount. When you switch to a competitive supplier, you could gain a newfound understanding of the charges at hand.
While the old utilities were often faceless institutions that served large swaths of customers across widespread power grids, suppliers tend to be localized companies that care about their customers. Communication is one of the backbones of the supplier sector, as most of these companies need to have a more personalized outreach program to attract customers in this newly deregulated market.
When you switch from your old utility to a new supplier, you could end up finding a more environmentally friendly energy option. Most of the new, competitive suppliers are more concerned about the environment than their older counterparts — due, in part, to the fact that increasing numbers of residents are opting for green energy alternatives. By offering energy that relies less on fossil fuels, suppliers are becoming more popular among residents that live in states where deregulation has gone into effect.