Standard electricity contracts can vary from person to person and from company to company.
Whether you are a commercial or residential customer, the average electricity contract can last anywhere from six months to over three years. No matter how long you have had your energy plan, when your contract is about to expire, it is essential that you know some basic, yet important, information about the contract renewal process.
Knowing the way the renewal process works can save you from making poor decisions regarding your energy plan.
When to Start Planning for a Renewal
If you are happy with your current electricity plan, then you will likely want to renew your current contract for an extended term. Typically, your Retail Energy Provider (REP) will contact you about 45 days before your renewal date. This gives you plenty of time to lock in a rate for your plan and sign on the dotted line to continue your service. It is typically best to try to renew your current contract one month before it expires so you can ensure seamless continuation of your current contract.
That being said, it almost always pays to shop around on a site like ElectricChoice.com. We show you many rates from local providers — you can see if it’d be best to stick with your current rate, or if it’d be better to switch to another company.
Also, if you wait to long to cancel your contract, you may have an interruption in your service. If you let your contract expire, you may be automatically switched to your local utility?s service and find yourself faced with dramatically higher energy rates. Make sure to read your company?s proposal for renewing your contract right away. Many REPs will actually offer additional benefits and incentives to current customers who decide to renew their plan early.
Reading the Fine Print With Automatic Renewals
There are some companies that offer automatic renewals for their customers. While this may seem like a time-saver for electricity customers, it is important that consumers take the time to read the fine print first before they find themselves involved with an automatic renewal contract.
There are some electric companies who automatically have their fixed-price contracts renew to variable rate contracts. This means, the contract a customer signed to lock in rates at 10 cents per kWh, could end up paying anywhere from 14 to 18 cents per kWh depending on the day and the market. Variable rate contracts fluctuate with the market and can make budgeting for energy costs very challenging. You may not realize that your contract automatically renewed and find a surprisingly high energy bill in your mail.
There are some commercial and residential clients who may be wary about renewing their contract, simply because they do not like the current prices in the market. When prices in the market are high the idea of locking in a new long-term contract can seem like a horrible financial decision. However, instead of letting the contract auto-renew to avoid buying a new contract, it is often best to sign a short-term or variable deal.
This will prevent you as the consumer from having to be locked in to a price you don?t like while still giving you the ability to exercise control over what you are paying for your energy.
Questions to Ask Your REP Before Renewing
What many consumers don?t realize about the renewal process, is that there is always some wiggle room with your energy provider. If you have any doubts about the renewal process, you can always call your provider directly. Some providers will even offer lower rates to stay competitive with other providers, if you can provide proof of an offer from a competing service.
Alternatively, and probably a better idea, is to contact a company like ElectricChoice.com — we can help answer any questions you have an make sure you’re getting a great rate from a trusted, local provider.
If you have an expiring contract, you can also call and ask for quotes for both a variable plan or a short-term service plan and compare those numbers to what a longer 12 month or longer fixed price offer would be. This allows you to compare the numbers and evaluate whether you want to sign a new long-term deal now or sign a shorter interim deal until you are ready to lock in a rate long-term.
If you were not offered any special incentives to sign a new contract, you can also contact your energy provider directly to find out if you qualify for any special discounts or incentives should you choose to renew your current contract.
Choosing A New Type of Plan
There are many situations where contract renewal is the best option for any consumer, whether you are a commercial client or a residential customer. However, there are also many situations where switching companies is in your best interest. In fact, some experts recommend switching companies every year due to the highly competitive nature of the market.
In situations where it is time for you to move on and choose a new type of plan, it is important to know your options, and what you are signing up for. Simply choosing the plan with the lowest number put in front of you, or the same type of plan you had before may not always work out in your best interest.
First, you need to know your current contract terms. Many people are surprisingly unaware of the exact terms of their contract. Look at your current energy bill. Make sure you are aware of your price per kWh, and whether you are at a fixed or variable rate.
When you start to look for new plans, you can always switch the type of service you have, there is no one type that is the ?best? for all customers. Ultimately, you need to decide whether you want to play it safe and lock in a fixed rate, or gamble a little and sign a variable rate contract.
Remember, variable rates fluctuate with the market, so you may end up paying a lot less than the fixed rate you locked in before, or a lot more. Ask yourself if you prefer to pay a fixed rate that you know you can afford for an extended period, or if you are willing to accept a low rate now with the possibility that it could spike in the future.
Keep these plan types in mind as you start to navigate the waters of locking in a new contract. Whether you choose to renew or find a new provider, the best approach to locking in the right terms is to educate yourself on the renewal process and read the fine print of any new electricity agreement.
As always, if you have any questions about renewing your current residential or commercial electricity contract, you can contact us and we’d be happy to help.