Even with the advent of electricity deregulation in several states, not everyone understands the power that customers have in terms of their electricity choice. So, if you’re thinking about selecting a new electricity provider or energy plan for your home, you need to understand the basics when it comes to choosing what’s right for you and your home. Now take a deep breath, center yourself, and focus. The first thing you should do is ignore the hype and hustle and get the real facts about the energy companies and plans that interest you.
Where are these facts?
Reputable energy providers post a plan description document for each electricity plan they offer on their website. Nowadays, most providers put a link to the description right near a plan’s name on their plan webpages. Plan description documents are listed under a variety of titles, and this title depends on what your state or province wants to call the document in question. In Illinois, they’re known as a “Uniform Disclosure Statement.” In Texas, it’s called an “Electricity Facts Label” or “EFL.” Connecticut has a “Disclosure Label” (example in pdf), Pennsylvania has a “Customer Disclosure Statement,” while Alberta names this information as a “marketing contract.”
No matter what the description, these documents usually disclose specific information about an electricity plan as required by state or provincial law:
- Whether it is a month-to-month variable-rate plan, an indexed plan, or a fixed-rate plan.
- The length of term or duration of the plan.
- Whether the plan has an introductory rate and what happens to that rate at the end of the introductory period.
- The rate per kilowatt hour (kWh) and if that rate depends on a usage rate. For example, whether you pay 11¢/kWh for using 1,000 kWh/month or 10¢/kWh for using 2,000 kWh/month.
- If there is a cancellation fee, and if so, how much it costs.
- Whether or not the rate can change during the contract period. This is an escape clause in the event your state or provincial utility commission changes rates.
- Whether there are any surcharges required by your state or provincial utility commission.
Plan description documents are important because they spell out how the contract works and what you can expect. By taking your time and comparing these documents between companies (or even plans for a single company) when shopping, you might even discover that those great deals may not be so great.
For example, say that you saw a plan that had a fantastic rate for only new customers. If you took time to ask questions about the plan and read the plan description documents before signing the contract, you would find that the plan description contained something like the following:
This promotional rate only applies to your first full monthly billing cycle. After your first full monthly billing cycle, the price per kWh you will pay will be set at a competitive market rate.
Which means after your first month, your rate increases. Teaser rates like this aren’t always your best choice —unless you just want a little extra time to pick a fixed-rate plan from the same provider. Buyer beware.
Terms, Service, & Conditions
There’s usually a second “Terms” document you want to look over. Usually called “Terms of Service” or “Terms and Conditions,” it specifies the conditions under which the contract with your provider will apply. These usually include length of agreement and expiration, billing information, service disconnection, pricing and payment, cancellation, other fees, credit, and deposit information. Because even in the 21st Century, some companies still want to charge for online bill paying, credit card payments, or other “conveniences”, you should always read the Terms. Monthly fees and surcharges alone can add between $5.00 to $15.00 to your bill.
A Plan For When You’re Shopping For a Plan
Be an informed shopper. When you’re shopping for an energy plan, remember the following:
- Ignore the hype and hysteria, look for facts
- Research the energy providers you are interested in, as online resources are plentiful
- Find factual information about their quality of service and reliability
- Evaluate plans that meet your usage requirements
- Read plan description documents and term documents, and if you plan on working with a phone sales rep, ask them questions about the plan’s terms that might be confusing to you
- Finally, only sign on to a plan agreement once you are familiar with the plan description and terms
Ultimately, gathering factual plan information now can often save you time, money, and aggravation later on.