Not so long ago, you received electricity from the utility provider and you paid your bill.
The utility company and the government set the price that you paid and there was no chance for any negotiation.
Your electricity was served by whichever utility provider worked in your state.
But now, deregulation in the market has meant that many states are opening up to competition which allows consumers to choose from a selection of electric and gas companies that operate in their area.
Competition is good for consumers as it drives down prices and offers the potential for increased customer choice.
Which States Are Deregulated?
It’s important to note that not all states are subject to such deregulation.
Some states have deregulation in the electricity market only, some in gas only. A larger number of states allow deregulation to some degree in both the electric and gas markets.
You can check online, and you can find a map of deregulated states here.
At least 30 states offer some form of energy deregulation.
What's On Offer?
It’s not just cheaper electricity prices that are on offer. Electricity providers now have a range of products and services that can help you to reduce your bill.
Month to month plans can be purchased which are ideal if you are moving or only going to be staying in a property for a short time. These appeal to students and those who want to try before they buy.
Fixed Price Contracts are an ideal way of locking in a good price for an extended length of time, sometimes up to 60 months.
Market Indexed Contracts tie the price you pay for electricity to another variable. Some electricity providers use the monthly closing price of NYMEX natural gas futures. Your bill may vary from month to month.
Other electricity providers have plans that offer price variation based on the time of day that you use electricity. These are also called indexed contracts.
Green energy contracts ensure that the provider that you use obtain some or all of their energy from green or renewable energy sources. The exact details will vary and you’ll need to check that your supplier meets your needs.
Other contracts include bundles with HVAC installation and maintenance, electric vehicle charging programs and prepaid plans.
How To Switch
You should do your homework carefully before you switch. A Massachusetts state report found that many consumers who switched energy companies ended up paying more than if they had stayed with their existing provider.
With that being said, you should start off by analyzing your current electricity usage and rates so you know exactly what you are using how much it currently costs you each month.
Very carefully compare rates at the new provider with your existing plan. Make sure that you are confident that a switch will save you money.
Check that the rate that’s on offer is going to stay that way. Often the introductory offer is for a short period only and will later switch to a higher rate.
It is often worth asking your current provider if they can match the rate you have found elsewhere. It may save you the hassle of switching altogether.
If you are sure that a new provider will save you money, then go ahead and switch.
Your provider can be switched over the phone, or online, and you should notice no change in your service. Your bill will, however, come from a different provider.
Switching electricity provider can be a great way to save on your bill as long as you do your homework and ensure that you are switching to a cheaper rate.
Remember, the plan you currently have may well best suit your needs.
There is the chance to save money, but you should consider carefully before you switch electricity provider.