How do I shop for electricity?

Direct Energy, December 6, 2023

4 minute read

How do I shop for electricity?

Direct Energy, December 6, 2023

4 minute read

When finding a power supplier for your home, shopping around is often the best way to find the best price and the best value. Not everyone has this freedom, however, as deregulation is not the case in all 50 states. Thanks to deregulation, many people can choose where to shop for their electricity plan (and their natural gas plan as well). That means you, the customer, are in control.

Woman on couch with pet and laptop
Woman on couch with pet and laptop
Woman on couch with pet and laptop

What does deregulation mean in your state?

In Texas, where much of the energy market is deregulated, there is a separation of responsibilities between the retail provider and the utility when it comes to the billing process. This is in contrast to other deregulated states where the utility typically handles both distribution and billing.

Texas deregulated market:

Since 2002, much of the Texas electricity market has had the ability to choose a retail electricity provider (REP), such as Direct Energy. In these areas of Texas, REPs aren't the only companies involved in providing electricity. Transmission and Distribution Service Providers (TDSPs) are among the entities that also play an important role.

  • Transmission and Distribution Service (Utility): The utility company, often referred to as the Transmission and Distribution Service Provider (TDSP), owns and maintains the power lines and delivers electricity to consumers. Utility charges, also called delivery charges, are set by the utility in your area and help cover the cost of delivering electricity or gas to your home.
  • Retail Electricity Provider (REP): The chosen REP owns the billing and customer service side of the relationship, so that you will receive your monthly bill from your chosen REP. This includes the agreed-upon rate per kilowatt-hour and any additional charges or fees specified in the contract.

Other deregulated states:

The utility company, which owns and operates the distribution infrastructure,  is responsible for both delivering electricity and billing consumers.

Key difference:

If you are a Direct Energy customer and you live outside of Texas, you will still receive your bill directly from your local utility. You will usually see Direct Energy as a line item on your bill under "supply" or "generation services." 

Check your current contract

If you're already under contract with an electricity supplier, you should review your contract to determine what penalty, if any, exists if you leave that company before your contract expires. In some cases, you could be assessed an expensive early termination fee that nullifies the benefits offered by a new provider. This fee can depend on the length of the contract and how recently you started services.

How do you find the right electricity supplier for you?

Begin by visiting your state's utility commision website, which will feature a complete listing of your options. This process is actually easier than it sounds, as these websites typically present a side-by-side comparison that is easy to follow and understand. Depending on the state you live in, you may have to enter your city or zip code to narrow the list of options in your region.

In any case, once you have your list, you can compare prices and plans. Here are three key considerations when shopping for electricity:

1. Rate
This is the unit price for the cost of electricity, which is priced by the kilowatt hour (kWh). To add context, the average U.S. household uses 899 kWh per month, though it's important to remember that many factors can increase or decrease your electricity usage. These may include season, the number of family members living in the home, and how many energy-efficient appliances you own.

2. Rate type
Just like price, the rate type has a significant impact on how much you will end up paying for electricity. Many companies offer fixed-rate plans, but some offer variable-rate plans. They are very different, and it's crucial to understand why.

  • A fixed-rate plan is a contract that locks in the same rate for electricity for a certain number of months. What's the advantage of a fixed-rate plan? It offers stability and predictability to your household budget.
  • A variable-rate plan, however, means you will pay a different rate from month to month, depending on the current market rate. On the one hand, you don't have a contract, so you can easily switch to a new provider. On the other hand, your bill can go up unexpectedly.

3. Plan features
Price is an important component of any new energy plan, but there are other things you should consider as well. Contract length, bonuses, reward offerings, and eco-friendly practices are all applicable selling features, too. Each of these qualities will vary from plan to plan (and company to company), and it's up to you to determine the right energy plan for your home, family, and budget.

4. Company type
Before you choose, it's important to understand that you could potentially be doing business with up to two entities to get your electricity.

  • Default utility: This company owns and maintains the power lines and delivers the electricity to all customers in their territory. You can also purchase electricity from this company. In some states, their rates are regulated by the state utility commission. In either case, a portion of your payment would go to the default company to pay the transmission fee.
  • Competitive supplier: These companies sell electricity to customers, often purchasing it from the electricity wholesale market. While they are required to register their business with the state utility commission and follow certain requirements, their rates are set competitively.

How do I sign up for an electricity plan?

The competitive energy market for electricity and natural gas allows customers to shop around for rates and plans so they can find the one that's perfect for their home and lifestyle. You can sign up for electricity or natural gas in just a few steps:

Texas deregulated Market:

Choose a retail electricity provider (REP):

  • Consumers in Texas can choose their retail electricity provider (REP) from a list of available options.
  • Use comparison tools or visit the Public Utility Commission (PUC) website to explore different plans offered by REPs.

Select a plan:

  • Once you've chosen a REP, select a plan that suits your needs. Plans may vary based on factors such as rate type (fixed or variable), contract length, and additional features.

Provide information:

  • To sign up, provide the necessary information to the chosen REP, including your name, address, contact details, and any other information required for identity verification.

Review and agree to terms:

  • Review the terms of the chosen electricity plan, including the rate, contract length, and any other relevant details.
  • Agree to the terms and conditions outlined by the REP.

Other deregulated states:

Create an account with your utility:

  • Usually, you can open an account online with the utility company. They will ask for information to help them verify your identity, such as your name, address, date of birth, and social security or driver's license number. You'll also have to indicate when service begins.

Then shop for your perfect plan!

  • Shop for the electricity plan that fits your needs. You can go to the utility's website and select the plan that is right for you. You will be asked for your service address, along with your name and phone number. You must also provide the account number with your default utility. (You can find this number on your most recent bill, or you can call the utility and talk to a service representative.)

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Amazon Prime on us

Want to enjoy all the shopping, streaming and savings you want with Amazon Prime, just for paying your electricity bill? Get an Amazon Prime membership on us with select plans! 

Signing up for Direct Energy is easy!

We offer a wide range of plans and even help you customize them to fit your needs! Shop our plans to find your best fit today.  

Need help placing an order?
Texas customers: call us at 1-855-461-1926
Northeast and Midwest customers: Contact us

Questions about your current service?
Texas customers: call us at 1-888-305-3828
Northeast and Midwest customers: Contact us