How to Choose an Electricity or Natural Gas Plan

Homeowners and businesses in Energy Choice states know they have the freedom to compare electricity and natural gas energy rates, but often aren’t sure how to choose the right energy plan or how to switch energy suppliers. They also wonder why they should compare energy rates and change to a new plan to begin with.

If you are in an Energy Choice state and do not shop for energy plans from alternative suppliers, you are missing an opportunity to secure predictable energy bills, avoid seasonal rate fluctuations, and choose clean energy options. 

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Comparing rates, choosing a new energy plan that fits your individual needs, and switching suppliers couldn’t be easier. We’ll even help guide you through the process.

Energy Choice is a fairly recent development in the United States and is available to citizens and businesses in several states. Until 1977, homes and businesses bought energy from their local utility. Then in 1977, 17 states began working toward deregulation legislation that would give consumers the power to change their electric and gas supplier.

Deregulation created competition between suppliers as well, translating into energy savings and plan options for homes and businesses. Today more than a third of all U.S. states offer some version of Energy Choice, whether that’s electricity only, natural gas only or both.

Energy reaches every home and business through the interconnected work of three providers:

Energy generation companies produce the energy that flows through the transformers and wires that eventually lead to your home.

Electricity suppliers source wholesale electricity from Energy Generation companies and provide retail energy to homes and businesses through utility company infrastructure.

Utility companies manage energy infrastructure, including transformers, wires, and poles. Delivery charges on your bill help maintain this infrastructure. Your utility company, in most cases, is also your default supplier if you decide not to shop for an energy supplier.

Shoppers may switch suppliers to take advantage of competitive pricing, save money, or at least secure more predictable electric bills. Shoppers may also value the ability to support a more sustainable future by choosing an affordable clean energy plan that helps reduce their carbon footprint.

Energy produced with little to no greenhouse gas emissions, like nuclear energy and other sustainable energy sources, is growing in popularity among consumers. Clean energy sources provide more than 20 percent of the power delivered to U.S. homes, and U.S. renewable energy consumption exceeded coal for the first time in over a century in 2019.

Carbon-free energy sources help maintain a vibrant, safe environment for future generations, and clean energy shoppers know this. That’s why some shoppers may choose an energy supplier based on that criterion alone.

Now that you know the benefits of Energy Choice for your home or business, it’s time to compare rates and decide if selecting a new supplier is right for you. And you can do it all in three easy steps.

Start by reviewing your current energy budget. If you know what you are paying for electricity and natural gas – as well as how that price is determined – you can make a more informed decision when comparing plans.

Billing for household and business energy consumption is typically measured one of three ways:

Overall usage

Electronic meters record the amount of electricity or gas expended, measured in and charged by kilowatt hours (kWh) for electricity and therms or cubic feet (CCF) for natural gas, which is then recorded by the utility company to determine your monthly usage levels.

Tiered pricing

This pricing system increases the cost for energy consumption each time you use a certain amount of electricity or gas over a pre-defined time. So, for example, an electric rate might increase every time you use 250 kWh of energy.

Time of use

Often called peak hours, some energy plans will charge more for energy usage during busy periods of the day.

The first decision you must make is the choice between two types of rates: fixed-rate and variable rate. Choosing electric company rates usually depends on your personal comfort level with shifting energy prices and the climate where you live. Here’s the difference:

Fixed-rate plan
Homeowners and businesses pay the same rate each billing cycle throughout the plan contract. Because energy prices can fluctuate based on demand, shoppers in geographic areas that enjoy seasonal temperature swings are often shopping for a fixed-rate plan. Budget-conscious consumers who want a more consistent monthly bill may benefit most from a fixed rate.

Variable-rate plan
Costs shift monthly based on changes in the energy market with this rate plan. If you follow market prices closely, can manage the math to ensure you are getting the best deal, and like the option of frequently switching energy suppliers, this plan might work well for you.

Beyond fixed-rate and variable-rate plans, make sure you also compare how long your energy plan will last. This is important because the price you pay may be influenced by the length of your plan. Most suppliers offer short-term and long-term plans.

Short-term plans 

Typically last 6 to 12 months. These plans are best for consumers who want to try new plans or regularly search for better deals. The risk is that when the contract term ends, there may not be a better rate to switch to.

Long-term plans

Usually 18 months or longer, give consumers an extended period of predictable energy costs. Regardless of seasonal price fluctuations, long-term rates are guaranteed to remain the same.

Also, see if the energy company offers any enticing incentives for making the switch. Incentives might include guaranteed satisfaction, typically a “try-out” period in which you can make sure you’re satisfied with the supplier, and loyalty rewards for staying with the supplier once a contract is complete.

With Energy Choice, you’re doing more than selecting a new plan, you are also choosing a new energy supplier. Take time to learn more about each energy company and find out if their values match yours. Learn more by finding out:

If the energy supplier is licensed to operate in your state 

You may discover some great rates only to find out the energy provider doesn’t offer those rates where you live. Energy suppliers must be licensed by each state’s public utility commission to do business there.

How they interact with the community

Does the supplier give back to the communities where they work? In what way do they give back?

How they interact with customers

Does the supplier respond quickly to customer concerns? Is it easy to contact them? You might find out by contacting the supplier before you make the switch.

Do they charge cancellation fees

Does the supplier impose an early termination fee? This might make a difference the next time you’re reviewing energy choices.

Once you have found the right energy supplier and a great natural gas or electricity plan, making the switch to the new provider is simple. In fact, your new supplier will manage the entire process with your utility company.

The actual transfer from one supplier to the other may take up to 45 days to complete, depending on your utility. Check your next couple natural gas or electricity bills after you make the switch to verify that your new supplier is active.

The only change you should notice is the name of the supplier and your energy rate reported on your utility bill. The rest of the experience should be seamless. Your utility company remains the same and will continue servicing electrical and natural gas equipment, the delivery of your energy, and billing you for those services.

Now that you know how simple it is to switch your energy suppliers, you are ready to figure out your current rate and compare it to electric and natural gas rates for different energy providers. Would a fixed-rate plan better serve your current situation? Or is a clean energy supplier appealing? Begin your search here, at Energy Harbor.