Whether you’re moving into a new house and need to sign up for electric service because your existing plan will be ending soon (or you’re unhappy with it), deciding on an energy plan can seem like a daunting task. There are a million providers to choose from, there’s a lot of unfamiliar jargon thrown around, and then there’s the whole process of setting up an account.
Not to mention that if you make a mistake and choose a plan that results in high bills – or you discover the hard way that the electric company’s customer service is lacking – well, good luck getting out of it without paying an early termination penalty in the hundreds of dollars.
How can you avoid these problems and sign up for the right plan the first time around? The answer lies in understanding your needs and the details of the electricity plans each company is offering. So let’s take a look at what you need to know to make the right choice for you.
Everything You Need to Consider to Choose the Best Electricity Plan
Selecting an electricity plan is like selecting any other service — you agree to buy a product (in this case, electricity) from a service provider for a specified length of time. To make the best decision, you’ll need to be informed about the variables – the electricity rate, the contract length, and the terms of service.
Understanding How Billing Works
Your electricity bill is based on your usage per kilowatt-hour. So, first things first — how many kilowatts of electricity does your household use per month? Looking at your past bills can give you an idea of your usage history. And, if you can, consider the entire year. Electricity usage changes from the hot months to the cold, and you want to make sure you’ve accounted for that in your decision-making process.
So as an example, let’s say you use 1500 kWh per month and your rate per kWh is 9.4¢. That means your monthly usage charges would be 1500 x $0.094, or $141 plus taxes and any other fees.
A fixed-rate plan is a plan in which the kWh rate doesn’t fluctuate. It’s set at a certain price and doesn’t change, regardless of the market, your usage, the time of day, or anything else. Fixed-rate plans typically have a slightly higher cost per kilowatt-hour, but they also aren’t subject to rate spikes like a variable-rate plan. You can do the laundry any time of day, any day of the week, and there won’t be any surprises when the bill comes.
Variable-rate plans are just that – plans with a rate that varies. They often have an attractive, low rate during certain times of the day — free nights and weekends, for example — and a higher rate during other usage periods. The factors that affect how much the rate varies include demand, weather, and the market. For some people, variable-rate plans are a great option that gives them a level of freedom and flexibility that meets their needs and works with their lifestyle. For others, it requires too much thought and oversight.
What Contract Term Is Right for You?
Electric plan contract lengths come in two varieties — long- and short-term. Long-term plans are usually 12, 24, 48, and even 60 months. They make the most sense for homeowners who know they’re not going to be moving and want to lock in a stable rate. Short-term contracts operate on a month-to-month basis, while some allow for a six-month term. They’re ideal for renters or people who want the freedom of not being committed long-term.
Do You Want Renewable Energy?
Green and renewable sources of energy like wind, solar, and carbon-neutral natural gas are in full swing, and some electricity providers offer electric plans that provide power generated only from these sources instead of traditional fossil fuels. This means that if environmentally friendly forms of energy creation are important to you, you have the option of purchasing that type of electricity. And conversely, you can also choose fossil fuel-created electricity. The choice is yours.
One thing to watch out for when searching for green energy plans, however, is that some companies charge a premium for renewable energy. In other words, it might cost a little more per kilowatt-hour than non-renewable plans. A lot of the time, the price discrepancy isn’t because it costs more to produce this sort of electricity, but rather because the company is simply charging a premium for what it knows some people will view as the more desirable product. (At Chariot, we only offer renewable electricity plans, and they’re powered by Texas-made solar energy. Best of all, we don’t charge a premium for your environmentally friendly energy choices.)
The Fine Print
Every service plan includes fine print, and electric service is no different. It might contain disclaimers about service reliability or your ability to seek compensation if you’re inconvenienced by the electric company. It will also detail the penalties if you end the contract early. Make sure you read and understand this, so there are no surprises later.
Early Termination Fees
Perhaps the “fine print” item that’s the biggest pain point with electricity plans is the early termination fee. If you sign up for a long-term electricity plan and cancel early, you might be liable for an early termination fee. These typically don’t apply if you move addresses. But if you switch to a different provider before your current term ends, that’s often when people find themselves paying an early termination fee.
However, don’t let an early termination fee needlessly keep you locked into a plan that’s not right for you. For example, if you’re in a variable-rate plan that’s resulting in billing spikes every month, do the math and calculate what it will cost to stay in the plan versus paying the termination fee and signing on for a better rate with a new provider. It might make better financial sense to pay and switch.
Choose the Plan That’s Right for You
There is a lot to think about when choosing the best electricity plan for your household, but with a little research and due diligence, you can be a smart and informed consumer who has a great plan with a great company.
If you’re in the market for a new provider or it’s been a while since you shopped around, check out the electricity plans we offer at Chariot. We provide 100% solar-powered electricity plans with energy generated right here in the great state of Texas. And we’re eager to earn your business the right way — no bad deals or gimmicks, just fair, reliable service with your satisfaction as the top priority.