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Blog Aug 15, 2018

How to Switch Electricity Providers

Texas Power

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Next to the walls, ceilings, and floors, electricity might be the most important thing in your home. And next to your mortgage or rent, it’s also usually the most expensive bill that you pay. However, if you live in a deregulated state, you have the option of switching to another, less-expensive provider. But what does this process entail?

Deregulated Electricity and how it affected Switching

Power used to be provided by local and regional monopolies that had absolute control over both the generation of power and the channels used to distribute it. However, some states have deregulated energy, which means that energy production and energy distribution are separate. (Another example of this is your phone – at one time, there was one major telephone company, but now there are various phone carriers to choose from.)

Although the average American consumes 888 kilowatts (kWh) of energy per month, residents in some states use much more. Louisiana leads the country in energy consumption with an average 1,240 kWh of energy use each month. Tennessee, Alabama, and Mississippi are the 3 states with the next highest energy consumption levels. Texas currently has the 5th highest average monthly energy consumption rate in that country (1,156 kWh). However, these are all hot-weather states, and that’s a contributing factor in electricity use and prices.

In Texas, the legislature passed a deregulation law (Senate Bill 7, also known as SB7) in 1999. This law allows people who live in most (but not all) parts of Texas to choose which electric provider they want to use.

Why Change Electric plans?

So, why would you want to switch providers? There are several good reasons.

In some ways, electric providers are like grocery stores, restaurants, and other businesses.  If you don’t like the price of apples or apple pie at one grocery store or restaurant, you’re free to shop at another establishment.

However, electric providers are different from grocery stores, restaurants, and other business in one very important way. Perhaps the food in one grocery store or restaurant is better than in other establishments, and that’s why these businesses charge more. Most consumers like quality products and services, and they’re usually willing to pay more for better quality.

But your electric service is the same regardless of the provider. You don’t receive a “better quality” of service if you pay more – all of the power is reliable and safe. And, since the service is the same, why would you pay more for it? That’s money you could keep in your pocket – in fact, some consumers save up to 20% by switching to another electric provider.

If you switch providers, since you’re receiving energy from the same source, you shouldn’t notice any difference in the energy service itself. Your utility is still responsible for maintaining transformers, poles, wires and the rest of the delivery infrastructure. Also, if there’s a storm and your power goes out, they can’t ignore you and refuse to turn it back on. Your utility is still responsible for any type of required maintenance – and again, you won’t notice any difference in the energy itself.

There are other reasons you might want to switch providers. For example, even though the quality of the electric service is the same, you may be dissatisfied with the customer service provided. And if you’re paying your money, you have the right to set expectations for how a company’s representatives respond when you interact with them.

Some people also switch become they’ve moved to another area, and their old provider is not available in that area. This is also an opportunity to find a new provider that may offer better rates.

The beauty of having deregulated energy is that competition drives rival electric providers to offer the best prices and customer service – or lose customers.

How to Switch Electric Plans

The switching process is relatively simple. If you sign up online, the first step is to enter your zip code. This information is used to determine what providers are available in your area. After you enter your zip code, you’ll usually see a variety of plans to choose from. Each plan includes information that can help you make the best decision.

For example, one plan may cost 11.7 cents per kWh, and it is a 12-month fixed plan, which means the rate is locked in for 12 months. Another plan may cost 12.1 cents per kWh, and it’s a month-by-month plan.

Some plans have a $30 minimum upfront payment and others don’t. Some plans charge a $99 early termination fee while other plans don’t charge any type of fee for early termination. Some plans require a credit check, while others don’t.

Some plans are only paid for in advance. However, these plans help you to better manage your budget and you can avoid unexpected surprises at the end of the month. Also, some prepay services also offer steep savings – up to 20% off – if you enroll in the auto-pay program.

In addition, some providers offer financial and energy assistance and low-income customer discounts.

After you decide on a provider and choose a plan, you can sign up on the provider’s website or call them. If you sign up on the website, you’ll review information about the plan you selected and sign the contract electronically. However, if you prefer to call the provider, they will send you information about your plan, and also send you a contract to sign and return.

The Power Switching Period

Usually, there’s a period – approximately three days – in which you can change your mind and cancel your contract. However, within seven days, your service is automatically switched to the new provider. During this time, you will not experience a loss of service and you won’t notice any difference on your end.

In the next billing cycle, you will receive the first bill from your new electric provider. However, before you switch, you need to check with your current electric provider if you have a contract with them to be sure that there are no early termination fees that you will have to pay.

Switching electric providers can save you money – and if you can receive the same level of energy service at a better price, it’s definitely worth your time to call or go online to discover your options. You have nothing to lose, but what you save could be substantial.

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