Lowest Rates

Everyone wants to save money on electricity, and finding the lowest rate is a good place to start. If you live in a location that has deregulated its electricity market (enter your zip in the box to check), you’re in luck; you have the ability to choose an electricity provider from a whole field of companies competing to offer you a good deal. Just remember that if you’re signing up for a variable-rate plan, your rate changes from month to month. That means you need to know more than the advertised initial rate; you also need to understand your future commitments and how your electricity bill will change over time.

About Electricity Rates

Electricity is usually billed by the kilowatt-hour how many thousands of watts you use, for how many hours. If you want to figure out exactly how much an appliance is costing you, just take the wattage, divide by a thousand to get kilowattage, multiply by hours of use, and multiply again by the rate described on your bill. A typical rate is in the range of ten cents per kilowatt-hour, although these can vary depending on location and customer. Businesses, for example, can often negotiate lower rates due to their higher volume of consumption.

The federal Energy Information Administration has a chart of electricity statistics by state and sector, along with a map that displays the information. We see rates of over 15 cents per kilowatt-hour and above on the coast; the lowest rates, found in interior states like Wyoming and Oklahoma, fall below 7 cents per kilowatt-hour.

Why Rate Isn’t Everything

When you’re searching for the best electricity contract, there are some factors to consider in addition to rate.
For instance, some companies offer a signup bonus that will sweeten your deal. In exchange for signing a new contract, they’ll give you a present like plane tickets or a hotel room. Sometimes they’ll just give you cash back directly on your first month’s bill. The bonus might outweigh a small difference in rate, even over the course of several years.

The length of the contract also matters. Some contracts last one or two years; others are simply temporary arrangements from month to month with no cancellation fee. The convenience of a deal that you can leave at any time might be more attractive to you than a difference in rate.

Then there’s the question of how the rate changes. A variable-rate plan will change along with the market. It’s this type of plan that can offer guaranteed savings by committing to always beating the market standard (sometimes known as the Price to Beat). A fixed-rate plan is more predictable; you pay the same rate each month, no matter what.

Finally, there’s the issue of source. Rather than pick the lowest possible rate, it might be worth it to you to sign a contract for green electricity. Electricity from all-renewable sources sometimes costs (a little bit) more than electricity from burnt coal—but it takes less of a toll on the environment and helps to support a worthwhile industry. You can decide if that’s how you want to spend your money.