6 Mistakes You Should Avoid When Shopping for Lower Energy Rates

There are some states in America that allow you to choose your energy supplier, which is to say, you can choose who supplies your electricity and/or natural gas. We call this “energy choice”.

Energy choice allows you, as a home or business owner, to save money on your energy bills by finding lower energy rates

Think of it as finding a new, less expensive phone plan. You don’t notice any difference, your phone, text messages, email, and internet still work perfectly fine, but you pay less for it. 

That’s the power of competition or “choice”. When it comes to finding lower energy rates, competition can help to save a lot of money on your monthly electric bill. 

In this article, I am going to cover 6 mistakes that you should avoid when shopping for lower electricity or natural gas rates, be it online or working with an energy broker.

1) Not comparing energy providers and their rates

The best part of energy deregulation is that you get to choose. However, too many choices can get confusing. Or sometimes you’re inclined to stay with the same supplier because it’s… well it’s convenient.

Instead of looking for the lowest price, or the first supplier presented to you, ask your energy broker or consultant to show you several different suppliers, their offers, and contract terms. 

Sometimes one supplier may have a good price, but a very restricted agreement. Another supplier may have lower pricing if you take a 48-month agreement, instead of a 12-month agreement.

The whole idea is to look at and understand your options.

2) Don’t be afraid of a contract

The idea of a utility contract can sound kind of daunting. But when you choose the right supplier and the right contract, it will prove to be very advantageous over time.

For example, energy rates increase yearly. If you choose a fixed-rate electricity agreement for 3 years, you will be protected against annual increases, and you’ll also avoid paying high electricity bills every time the electricity prices spike throughout the year.

3) Not understanding the difference between a fixed-rate and variable-rate agreement

A fixed-rate agreement means that you will pay the same rate for your energy for a set number of months, no matter what the energy market does. Fixed-rate energy contracts help you save money, and provide stability long term.

A variable-rate agreement means that you pay for your electricity or natural gas based on the current market. Variable-rate agreements are usually month-to-month. This kind of agreement can help in the case of a crashing energy market, however, as you’re probably aware, markets fluctuate and when they go down they also go back up. Being on a variable-rate agreement, you run the risk of paying high energy rates once the market starts to increase or spike.

4) Going with the “go-to” electricity or natural gas company in your area

The idea of letting the go-to energy company in your area handle your utilities automatically might seem like a good idea – especially if you’ve never changed suppliers before.

I understand, it’s probably similar to your TV and internet plan at home, your phone plan, and so on. Going with the go-to service, or sticking with the same company for years, can seem convenient.

But the reality is, energy suppliers are trying to win your business and venturing out, and looking for a new energy supplier can lead to amazing savings and price protection.

The important factors are to compare the suppliers, their rates, and their contracts, understanding what will be changing once you sign up with another supplier, and I suggest working with a licensed energy broker or consultant to help you through the process.

5) Not understanding what will change once you sign up, or not understanding the contract

Earlier in this video, I mentioned some suppliers offer a very low rate, as an introductory rate, which later turns into a much higher rate. I also mentioned some suppliers offer low rates but very restricted contracts.

When choosing an energy supplier, a rate, and a contract term, it is important to understand to:

1. Understand what will be changing once you sign on and,
2. Understand the contract you are signing.

As energy consultants, we not only provide you with full transparency and your own copy of the written agreement between you and your new supplier, but we also help you understand it and provide any information you need to help you make the best choice for your business.