The Complete Guide To Switching Your Energy Supplier: Jargon-Free
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It may seem like a bit of an alien concept switching your energy supplier; however, there are now 32 states that have some form of choice on their natural gas and electricity supply. The deregulation process of energy markets in the United States and all over the world is in full flow, forcing energy providers to be much more competitive in their pricing and customer service, improving the consumer experience in all areas.
Switching your energy supplier does not need to be a daunting experience, nor does it require mountains of information. Follow this simple guide and you’ll be switched in no time with plenty of extra dollars to spend on the things that matter.
Who can switch?
First of all, let’s see who is actually eligible to switch their energy providers. Some states have no choice at all, some have complete choice and others have choice of just natural gas or just electricity. It’s all shown in the table below:
How does it work?
So, before deregulation, and for those states that are yet to have a choice, there was only one energy company that provided natural gas and one company that provided electricity in each state, or in some cases in a certain area within the state. You had no choice but to pay the rates they set and get on with your life; however, that has now changed.
Although the infrastructure that is in place to deliver natural gas and electricity to your house is still fully owned by that same energy company, the energy itself is now controlled by a number of industry players. This means that although you will still pay your incumbent (default) energy supplier for distribution and service costs, the price per kilowatt hour (kWh) and therm is now open to competition. It’s now your job as a consumer to choose the cheapest option and save yourself some money.
kWh = unit of electricity in which your usage is measured
Therm = unit of natural gas in which your usage is measured
Fixed vs Variable
When you’re choosing your new tariff you’ll notice that the words ‘fixed’ and ‘variable’ will appear quite frequently. These terms refer to the price per kWh or therm applicable to each tariff. A standard variable tariff, the type that you will have been subject to through your incumbent supplier, has a unit price that rises and falls depending on the time of year and wholesale costs of energy. In most areas, summer prices are higher than they are in winter, which is reflected in the price per kWh or therm. If you opt for a fixed tariff, which is probably the most advisable to protect yourself against wholesale price increases, you will have a fixed unit rate, meaning no matter what the time of year, you will pay exactly the same for each unit of energy you use.
The difference between these tariffs is, however, that you will sign for a specific term. Most contracts will lock in your unit rate in a division of 12 months, meaning you’re likely to have one or two years of the same price. Careful, though, because most tariffs will have an exit fee for if you wish to terminate the contract before your agreed date. This can sometimes be quite a hefty sum, so make sure you’re going to remain in that house and you have a good deal that you’ll be happy with for your term period.
So, how do I switch?
There are a number of ways in which you can do this, the easiest of which is to use an online comparison service. Two of the most popular in the US are Choose Energy and Power 2 Switch . This is a model that has been taken from European services such as Selectra . They take all the energy tariffs that are available in your postcode and show them to you in an easy to understand comparison, allowing you to easily see the cheapest options available to you. It is important that you have a good idea of how much you have been paying per unit before the switch so that you understand how much you are likely to save. If you don’t have your last 8 - 12 bills available to you, you can give your energy company a call.
After you have found a tariff that suits your needs, you can easily proceed with the switch by filling in your personal information and committing to your new deal. There’s no need to worry about cancelling your current tariff, as your new supplier will take care of everything.
Another benefit of switching your energy provider is that you can now opt for a 100% renewable electricity tariff, which probably costs a lot less than you’d expect!
Frequently asked questions:
Does the new/old company need to come to my property to change anything in relation to my supply?
No. No-one needs to come to your home to change anything. Your new supplier will deal with everything remotely: no changes are made to your physical supply.
If I have already switched supplier, can I switch again?
Yes. The switching process isn’t always away from your incumbent supplier. You can switch between the competition in order to get the best current tariff.
What happens when my plan ends?
When your plan ends you will be either transferred to your current supplier’s month-by-month variable tariff or your tariff will be renewed for a second term. This all depends on the terms and conditions of your tariff. You should make sure that you’re well read-up a few months before the term expires. That said, you are likely to receive a reminder from your supplierand the switching service you used 30-60 days before your tariff ends. It is advisable that you prepare to switch when your tariff ends to avoid reverting back to the more expensive rate you were likely paying before.
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