In my weekly newsletter (you can signup in the box in the right sidebar), we cover painless ways to save money. One of the tips we recently discussed was saving some dough by changing electric companies. The response from readers was amazing. I received countless emails from readers who had great insight into the whole process. So I’ve collected that information, undertaken some more research, and provide the results below.
Just a few years ago, consumers didn’t have a choice about which electric or natural gas company served their home or business. Utilities worked with governments to set energy prices, and your service came from whatever energy company happened to serve you area.
Now, more and more states are open to deregulation. This allows competition as consumers choose from multiple electric and/or gas companies that serve their area. As a result, competition and market demands bring about changing prices.
Because competition between energy companies often drives prices down, you may be able to save money by taking advantage of this. In fact, the 2012 Annual Baseline Assessment of Choice in Canada and the United States report by the Distributed Energy Financial Group showed that residential customers often save money when they have the ability to switch utilities companies.
Besides saving money, customers can also take advantage of other programs, which may be easier to find with the choice of energy companies. Other advantages include:
- Month-to-month power contracts, often with lower costs
- Fixed-price contracts for two to 60 months
- Market-indexed prices that include defined price ceilings and possible price reductions
- Time-of-use rates, which can lower costs with free or discounted energy at particular times or days
- Prepaid energy options
- Green or renewable energy contracts
- Electricity bundled with other services like HVAC system maintenance or home energy audits
- Electricity bundled with energy management devices, information and/or apps
- Solar leasing programs
- Rate discounts and rebate card programs
- Special electric vehicle charging programs
Even if you aren’t in a deregulated state, your power company may have some programs like these in place. But these programs – and the general ability to cut costs by switching providers – are most available to those in states with significant consumer choice.
Is Your State Deregulated?
Before we talk about how to switch power companies, let’s look at whether you can switch. The ABACCUS report notes that nine U.S. states have “significant levels of switching in the residential sector.” These states include:
- Texas (the best state for this issue)
- New York
There are other states that are technically deregulated, but which may not yet have enough competition to offer better choices. Allied Power Services, a company that helps businesses save by switching energy companies, lists these states as having deregulated electricity:
- New Hampshire
- New Jersey
- New Mexico
- Rhode Island
Additionally, these states offer at least some choice when it comes to gas services:
- West Virginia
So this means that 30 of the 50 states have at least some choice for at least some types of energy. If you live in a state in the first list, you’re most likely to benefit from the rest of this article. If your state is on one of the other lists, you might be able to save money by switching electric companies.
What if your state isn’t listed? You won’t be able to switch electric or gas companies yet. But as more states see success with energy deregulation, the trend is likely to spread to your state, too.
Steps for Switching Companies
Now that you know which states are eligible, it’s time to look at switching electric companies. Here’s what you need to know:
- Compare rates. Obviously if you’re going to switch, you want to make sure you’re comparing rates. There are several websites, listed below, that will help you do this. Be sure to look over the whole contract. Some electric companies will offer you a low lead-in rate for a few months to get you to switch, only to raise the rates once you’re locked into a contract.
- Compare other services. Remember, you might be able to save by taking advantage of other potential services, as well. If you’re interested in time-of-use discounts, green energy, or any of those other options listed above, be sure to check those out with the energy company options in your area.
- Ask your current provider for better prices. It’s always worthwhile to ask your current energy provider if it will give you better prices or other perks before you switch. Just quote the deal you’re planning to sign up for with another company and ask if they’ll match it.
- Switch companies. If your current provider turns you down, then switch companies. With most companies, you can switch online or over the phone. Your service shouldn’t be interrupted.
Here’s a list of sites you can use to find new energy sources and to compare prices:
- Choose Energy: A site for Texas residents that walks you through the process of selecting and switching electric companies.
- PowertoChoose.org: Another site that is specifically for comparing offers and switching energy companies if you live in Texas.
- FirstEnergy Solutions: This is the website for an energy company that serves Maryland, Pennsylvania, New Jersey, Ohio and Illinois.
- PA Power Switch: As you might guess, this site is for Pennsylvanians who are interested in switching power companies.
- CT Energy Savings: This site is for Connecticut residents wishing to switch power companies.
- CT Energy Info: This is another information center for Connecticut residents, and you can also compare suppliers here.
- Electric Choice: This website will compare electricity choices for residential and commercial customers in just about any state that allows it. Just enter your zip code to get started.
- Save on Energy: This is another site that will let you compare rates by zip code.
If you’ve switched utility companies, leave a comment to share your experience.Topics: Smart Spending