Questions to Ask Retail Providers

There are several questions you will want to ask a retail electricity provider prior to signing any contract.

Are you licensed to do business as an electric supplier in my state?

In areas that allow electric choice, the retail electricity provider must be licensed by the state’s utility regulator. Utility regulators are government entities that oversee and regulate utilities in the state, and may be called “public service commissions”, “utility regulatory commissions” and other titles.

To find out what entity regulates your utility, click on your state on this map.

What is the rate per kWh that I am being offered?

The rate you are offered will be expressed in cents per kilowatt hour (cents/kWh). You will want to compare this rate to the rate you are currently paying, often referred to as the Price-to-Compare if you are receiving electric supply from your utility. You can find the rate you are currently paying on your electricity bill. Of course, you’ll want the new rate to be lower than your current rate.

Is the offered rate a fixed-rate or a variable-rate?

Fixed-rate electricity plans offer one set rate that will not change for the duration of the contract. Variable-rate electricity plans offer rates that vary along with wholesale market prices. Variable rates will change from month-to-month (sometimes sooner), so the initial rate you are offered may not be what you will actually pay. There are benefits to both fixed-rate and variable-rate plans.

How long does the contract last?

For variable-rate plans, the contract should be a month-to-month contract with the option to cancel at any month.  Be sure to ask if the variable rate changes from month-to-month, by the amount of electricity you use, by time-of-day, or in another way. For fixed-rate plans, contracts may have durations of 3-, 6-, 12-, 18-, 24-, and 36-month terms. Shorter plans may have lower rates, but longer plans may save you more over the long-run. The choice is yours.

Are there any other charges other than the electricity supply rate?

In some areas, it is normal for retail electricity providers to add on additional fees. Sometimes, the additional fees would be paid to the utility anyway if you had not made the switch. Otherwise, if there are additional fees, ask that all fees are disclosed and described, and make sure that the fees aren’t causing you to pay more than you otherwise would if you don’t make the switch.

Do I have to sign a contract?

For a fixed-rate plan, you will generally have to sign a contract. For a variable-rate plan, you may or may not have to sign a contract. Be sure to ask if you can cancel the contract at any month if you are considering a variable rate contract.

Are there fees for early-termination of the contract?

Many retail electricity providers impose early termination fees if you can cancel service before the contract has expired. Make sure that these fees are disclosed, and ask if these fees can be reduced or avoided if you happen to want to cancel the contract in the future.

Is there a fee for switching to another provider or going back to the utility?

Some retail electricity providers may charge for a contract’s early-termination (see question above). On the other hand, sometimes providers do not charge a fee for switching to another provider or going back to the utility.

What other fees are required to sign up? Is a credit check required?

Some retail electricity providers will require a security deposit and/or an enrollment fee. Ask that these fees be disclosed prior to signing any contract. For security deposits, ask how and when the deposit will be returned to you.

Does the provider offer other incentives for signing up?

Some retail electricity providers will offer sign-up bonuses, rewards programs, and other incentives such as free or discounted home energy audits, bill-bundling with home telephone providers, and free or discounted repair services on heating and cooling units. Be sure to first consider the rate you are paying before you take into account any extra incentives.

How long will it take for the new provider to show up on my electricity bill?

The name of your retail electricity provider may or may not show up on your electricity bill. The new rate will show up on your electricity bill in one to two billing cycles, depending on what day of the month that you decide to make the switch.

From where does the electricity come?

Most retail electricity providers purchase electricity made from traditional energy sources, including coal and natural gas. Providers may also offer partial or 100% renewable and/or green electricity. If you are environmentally conscious –or just believe in ‘going energy green’- ask about these options.