Shopping for an Electric Company
By: Source: AARP.org Date Posted: 2003-10-22 16:19:00-04:00
Until recently, consumers had no choice in electricity companies or prices. You bought electricity from the one public utility company in your area. Now in many states you can shop among two or more electricity suppliers. You may even have gotten email, mail or phone calls to ask for your business.
But more is involved than simply choosing the cheapest company. When buying one kind of cereal over another at the grocery store, for example, you look at price but also check out what nutritional value and calories each brand holds. It pays to take equal care in shopping for electricity. And you need to know what to look for to avoid getting a shock when that first bill arrives.
Points to Consider
LicensesMake sure that the company has a license. Do this by checking with the state agency that regulates electricity. This protects you from dealing with fraudulent companies that take your money and run because they can’t legally do business in your state.
UseTo understand the price charged annually you’ll need to know how much electricity you use throughout the year. Your “usage profile” shows how much electricity you use. Ask your utility company for a copy of your “usage profile.” Studying it will give you an idea of how much energy you use and when.
CostUsually you pay for the kilowatt-hours of electricity you use. Ask each company:
- Does the price stay the same each month or does it goes up or down based on the season?
- Are there any start-up deposits, service fees, switching costs, or taxes?
- Is there a charge to change companies?
- How much time do you have to change your mind once you make a choice? Do you have a day, several days, or longer?
- Is a budget plan available? Does the company offer a way for you to pay the same amount for electricity each month? (Companies do this by estimating what your annual bill is likely to be and then dividing the total by 12.) You might prefer this kind of billing since it prevents a nasty shock when electricity bills spike upward in the summer or winter months.
Ask questions if you don’t understand the words used or choices you must make. Even if you buy electricity from a new supplier, you will still pay the public utility company to deliver – or provide--your electricity. You may get separate bills from both the supplier and the provider.
SourceIs the way the electricity is made a concern for you? Companies may generate electricity from water, coal, wind, or nuclear fuel. How the electricity is made may affect the environment. If you feel strongly about the environment, you may want to take this into consideration when you make your choice.
SafeguardAsk the companies you are comparing who has to confirm your decision to change suppliers. Having someone confirm you are switching protects you against being moved to a new supplier without your permission. This is often called “slamming.”
Protect Yourself
Once you choose an electric company, make sure the contract includes all the terms in writing. Doublecheck that you know the costs and how to get in touch with the company with questions or complaints.
You don’t have to switch!
Remember it’s OK to stay with the same electric company. Your power won’t go off!
AARP Resources
Consumer's Glossary of Electric Utility Restructuring Terms
This dictionary helps you understand those unfamiliar words in energy contracts.
Additional Resources
Energy Savers: Tips on Saving Energy and Money at Home
Did you know that 20% of your home energy bill comes from your appliances? The federal government’s user-friendly, easy to navigate Web site has lots of information and links.
NARUC: State PUCs (Public Utility Commissioners)
For information on your state’s regulatory commissions, click on your state.
Books
Find these books online at www.BarnesandNoble.com.
Electric Power Industry: In Nontechnical Language
By Denise Warkentin, PennWell Publishing, January 1998
A history of the electric industry, how it works, and why changes are in store.
Consumer Guide to Solar Energy: New Ways to Lower Utility Costs, Cut Taxes, and Take Control of Your Energy Needs
By Scott Sklar, Kenneth Sheinkopf, Bonus Books, Inc., May 2002
When it’s practical to use solar energy and what the cost savings may be.
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