How to Choose an Electricity Supplier

In deregulated markets, you have the power to choose your electricity supplier. This freedom creates opportunity for significant savings—potentially $100-400 per year—but also introduces complexity. With dozens of providers, hundreds of plans, and countless rate structures, how do you make the right choice?

This comprehensive guide walks you through a 7-step process to choose a supplier with confidence and avoid the common traps that catch unsuspecting customers.

Step 1: Confirm Your Market is Deregulated

Not all of the United States has deregulated energy markets. Even states like Texas and Pennsylvania have non-deregulated areas. Before shopping for suppliers, confirm you actually have choice in your area.

Check These Resources:

• Texas: PowerToChoose.org - Enter your zip code to see available providers
• Pennsylvania: PAPowerSwitch.com - Official state comparison tool
• New York: NY PSC website - Check by utility territory
• Ohio: EnergyChoiceOhio.com
• Other States: Contact your state Public Utilities Commission (PUC)

Important: If your utility is listed as "regulated," you cannot choose a supplier. Your utility is your only option. Focus instead on energy efficiency and other cost-reduction strategies.

Step 2: Know Your Current "Price to Compare"

Your utility's "Price to Compare" (PTC) is the supply rate they charge for electricity generation. This is the benchmark you use to evaluate competitive offers.

How to Find It:

1. Get your current electric bill
2. Look for a line item labeled "Price to Compare," "Energy Rate," or "Supply Charge Rate"
3. Write down the rate (e.g., 12.5¢ per kWh)

Important Note: This is ONLY the supply portion of your bill. Your total bill also includes delivery charges (for the poles, wires, and grid), taxes, and other rider fees. Any plan offering a rate lower than your PTC for the supply portion will save you money on that component, though your total bill savings depends on all components.

Current 2025 Price to Compare Ranges (by state):

• Texas (ERCOT): 10-13¢/kWh (varies by region)
• Pennsylvania: 12-15¢/kWh (varies by utility area)
• Ohio: 11-13¢/kWh
• New York: 13-16¢/kWh

Step 3: Analyze Your Usage Patterns

Different rate plans benefit different usage patterns. Before comparing plans, understand how you use electricity.

Find Your Average Monthly Usage

Look at your last 12 months of bills and calculate your average. Check your current bill for the "Total Usage" or "kWh consumed" line item.

Usage Categories:

• Low Usage (< 500 kWh/month): Apartment dwellers, mild climates, all-electric homes with good efficiency
• Average Usage (500-1,200 kWh/month): Typical single-family homes, especially with air conditioning or heating
• High Usage (> 1,200 kWh/month): Large homes, homes with electric heating/cooling, homes with electric water heaters

Seasonal Variation

Most U.S. homes use significantly more electricity in summer (air conditioning) or winter (heating). Check your highest and lowest usage months—this matters for certain rate plans.

Why It Matters: Some plans offer "free nights and weekends" or time-of-use rates that could work well for you if your high usage coincides with peak times, but could be expensive if it doesn't.

Step 4: Compare Plan Structures and Rates

Electricity supplier plans fall into three main categories. Choose based on your risk tolerance and usage patterns:

Fixed-Rate Plans

What You Get: A rate locked in for the contract term (typically 6, 12, 24, or 36 months). Your rate doesn't change month-to-month.

Best For: Budget predictability, peace of mind, protection against rate spikes

Trade-Off: Early Termination Fees (ETFs) if you cancel before contract ends

2025 Market: Fixed rates range from 11-14¢/kWh in most deregulated markets, depending on contract length and market conditions

Variable-Rate Plans

What You Get: A rate that changes monthly based on wholesale market prices. No contract.

Best For: Flexibility, short-term situations (moving, temporary housing), monitoring market trends

Risk: Bill shock during market spikes; rates can double or triple during extreme weather

2025 Market: Variable rates average 10-12¢/kWh but can spike 15%+ during peak demand seasons

Time-of-Use (TOU) Plans

What You Get: Different rates for peak hours (typically 2-8 PM) and off-peak hours

Best For: Customers who can shift usage to off-peak times (running dishwasher at night, charging EV during off-peak)

Risk: Significantly higher bills if you use power during peak hours

Example: Off-peak: 8¢/kWh, Peak: 18¢/kWh. This works great if you use 80% of electricity at night, terrible if you use 80% in the afternoon.

Step 5: Evaluate Contract Terms and Fine Print

This is where many customers get burned. Read these sections carefully:

Early Termination Fee (ETF)

This is the penalty if you cancel before the contract ends.

Questions to Ask:

• What is the exact ETF amount? ($50? $200? Percentage-based?)
• Can it be waived if rates drop significantly?
• Is there a "transfer" option instead of a fee (transferring your contract to someone else)?

Pro Tip: Some suppliers charge $100-150 ETFs routinely, while competitors charge $0-50. This single factor can be worth $100+ difference over 2 years.

Renewal Policy

Critical Question: What happens when your contract expires?

Watch For:

• Auto-renewal into a variable rate (often at much higher rates than your fixed contract)
• Silent renewal that changes your terms without notice
• Automatic switches to higher-fee plans

What to Look For: Plans that expire completely and require you to actively choose a new plan. Set a calendar reminder 60 days before expiration to shop for your next rate.

Monthly Service Charges

Some suppliers charge a monthly account fee ($5-10/month) on top of your energy charges. Over 24 months, this adds up to $120-240.

Always compare total monthly cost, not just the per-kWh rate.

Delivery Charge Impact

Your utility still handles the "delivery" portion of your bill (the wires, poles, grid maintenance). This is NOT affected by changing suppliers. Your utility continues to charge this regardless.

Your total bill = Supply rate (you choose) + Delivery charge (utility) + Taxes + Other fees

Step 6: Research the Supplier's Reputation

Price isn't everything. You want a supplier that actually delivers on its promises.

Where to Check Reputation

• State PUC Website: Most states publish complaint data about suppliers. Check if the company has numerous billing complaints or service issues.
• Consumer Reviews: Google reviews, Better Business Bureau (BBB) ratings, but take individual reviews with a grain of salt (angry customers are more likely to leave reviews)
• PUC Enforcement Actions: Some suppliers have been fined for deceptive practices. Check if your supplier appears on enforcement lists.
• Customer Service Accessibility: Can you actually talk to someone on the phone? Does the company respond to complaints?

Red Flags

• Door-to-Door Sales: Be extremely wary. Aggressive door-to-door sales tactics often indicate a problematic company. Get everything in writing if you engage.
• Pressure to Sign Immediately: Legitimate suppliers let you take time to review. Pressure tactics are a major red flag.
• Promises of "Free" or "Guaranteed" Savings: Energy markets fluctuate. No one can guarantee savings. Claims of "free nights and weekends" that would save you hundreds are often misleading (peak rates are much higher).
• Unclear Terms: If the Electricity Facts Label (EFL) or Terms of Service is confusing or incomplete, don't sign. Reputable companies make terms crystal clear.
• Unwillingness to Provide Written Confirmation: Always get written confirmation of your rate, contract term, and ETF before you switch.
• Bait-and-Switch Practices: Some companies advertise one rate but "find issues" with your account and quote a different rate at signing. This is illegal—report to your state PUC.

Step 7: Make Your Selection and Switch

Once you've decided, here's the process:

Before You Sign

1. Get Everything in Writing: Contract terms, rate, ETF, contract length, start date, end date—all in writing
2. Verify You're Deregulated: One more check using your state's tool to confirm you can switch
3. Check Contract Start Date: Ideally, your new plan starts on your current utility's meter read date (to avoid gaps or overlaps in billing)
4. Review the EFL/Terms One More Time: Don't sign anything you don't fully understand

During and After Switching

1. Keep Both Bills: For one or two months, you may see both your old utility bill and your new supplier bill while the transfer processes
2. Watch Your First Bill: Verify the new supplier's rate matches the contract, and that you're not being double-billed
3. Set a Contract Expiration Reminder: Put a reminder 60 days before your contract ends so you can shop for your next plan
4. Keep Documentation: Save your contract, EFL, and all related correspondence for at least 2 years

Shopping Strategy: Best Times to Lock In Rates

Electricity prices follow seasonal patterns. Smart shoppers lock in rates at the right time:

• Spring (April-May): Prices are typically lowest as heating demand ends. Good time for fixed-rate contracts.
• Summer (June-August): Prices rise due to air conditioning demand. Rates are higher, but if you're shopping for a fall contract start, you might find competitive off-season pricing.
• Fall (September-October): Moderate pricing. Good for locking in before winter.
• Winter (November-February): Highest prices due to heating demand. Avoid locking in long-term fixed rates unless you have no choice.

Best Practice: If you're on a 12-month contract, try to renew in April/May when prices are lowest.

Summary: Your Decision Checklist