As someone who advocates for electric choice and competition, I consider myself fairly well versed on the ins and outs of electricity shopping. But recently my husband and I fell victim to one of the most common electric shopping mistakes. We signed up for a variable rate plan with a new provider in our area and then failed to check our rate for the next four months. Last week I sat down to pay my bill and realized we were paying almost twice the rate of other suppliers in our territory and far more than the default rate. How did this happen?
We signed up for a variable plan at a promotional or introductory rate. Too often, shoppers rush to sign up with the cheapest provider without understanding the temporary nature of that rock-bottom rate. Depending on which state you live in, providers have to divulge the nature of their pricing. In Texas, the term introductory rate must be in the title of their plan. In Pennsylvania, the Pennsylvania Utility Comission lists which providers are using introductory pricing. Here at ElectricChoice.com, we notify you of a rates temporary nature in the Promo column.
How can you avoid the rate shock my husband and I experienced? First, understand whether you prefer a fixed or variable rate. A fixed rate stays the same throughout the entire term and you pay a little more for that security. A variable rate generally changes with the market price of electricity- which is closely tied to natural gas and other energy sources. One month you may have an extremely low rate and the next a rate five cents per kWh higher. Companies can also adjust variable pricing at their discretion. The bottom line is, if you are not willing or able to monitor your electricity bill every month and then switch when the rate gets too high, you should stay away from promotional pricing.
Second, make sure you get straight answers about how long your promotional pricing lasts and any cancellation fees. Most companies will give you a promotional price for your first billing cycle or even up to three billing cycles before the market rate kicks in.
Finally, don?t be afraid to negotiate. Companies cannot predict what your next bill will be under a variable rate, but if you are unhappy they may offer you a special deal on a fixed rate plan or another concession. It never hurts to call and explore your options.
