What To Know When Shopping for an Electricity Provider

Electricity use shows up on our monthly bill as one lump sum. If we could see an appliance-by-appliance breakdown of energy consumption, we could develop more effective energy conservation habits. What is easier to make sure we have chosen the most affordable provider. 

1. What To Consider When Shopping for a New Electricity Provider

If you are lucky enough to live in a deregulated market, you have the power to choose your own provider and electricity plan. The idea of switching energy providers can be potentially confusing but it is worth the effort as the right provider could save you several hundreds of dollars from your annual bill. 

Make sure the provider has a good reputation. As opposed to looking at deceptive marketing deals, look at user reviews.

Compare rates

Fortunately, there are many comparison sites these days that show you both the actual rate and the type.

 Consider the plan length

It can be intimidating trying to select a two-year plan. Whether you choose a short- or long-term plan depends entirely on your appetite for risk. But before you commit, make sure you look for cancellation fees and if there is the exception to the early termination fee for customers who are moving and can provide proof of their new address. 

2. How Do I Calculate My Power Usage

 You can calculate how much an appliance is costing you each month if you know the wattage, the average amount of time you use it each day, and your current electricity rate. Most appliances and electronics have a small label that lists the wattage along with other information stamped into metal, like on the base of a light bulb. Otherwise, look into the user’s manual or on the manufacturer’s website.

To calculate the energy consumption cost, start by multiplying the wattage of the device by the average number of hours you use it each day. This gives you the watt-hours per day. For example, a 120-watt television that you use four hours will give 480 watt-hours per day. Then, you divide it by 1,000 to convert it into kilowatt hours per day, or kWh per day. In this case, you get 0.48 kWh per day. Since we’re calculating the energy consumption for a month, you should multiply the kWh per day by 30 days and you get 14.4 kWh per month. The last part is to multiply this number by your electric provider’s kWh rate.

Repeating this process with frequently used appliances and electronics throughout your home will help you see a clearer picture of where your electricity dollars go. If numbers aren’t your thing, you can also get an idea of how much it costs to operate an appliance by checking its Energy Guide label just keep in mind this this figure won’t provide results as accurate as your own calculations.

 3. What Is the Difference Between Fixed and Variable Rates

With so many options for electricity plans in a deregulated market, knowledge is power. The more you know about each plan, the easier your decision will be, and the more money you will save. In order to figure out which plan is best, you must learn about each plan: Fixed Rate, Variable Rate and Indexed Rate.

Fixed Rate

A fixed rate plan locks you into a predetermined rate for a certain length of time. The best time to sign up for a fixed rate plan is early spring, right after the peak of the winter and before the peak of the summer to ensure the lowest rate. It will save you the most money when the prices of electricity are rising and it’s easier to budget. But, if electricity prices fall, you’ll be stuck with a more expensive rate as you’ll be locked in your contract.

 Variable Rate

This plan changes month to month, depending on the market price of electricity. The good part is that it does not have cancellation fees and therefore you have the flexibility to change providers. But, you will be susceptible to a large spike in monthly cost if electricity prices increase dramatically and therefore, your bill will be unpredictable.

 Indexed Rate

This complex plan means that the price of your electricity is tied to another underlying variable such as the cost of natural gas for the month. The price of the index defines the price of your electricity through a certain formula that your electricity provider will establish. Price can be both fixed and variable and you have the freedom to decide. But for this plan to be beneficial for you, you need to do a lot of research. If you are an active consumer and enjoy researching the best deal, this plan might be a great fit for you.

 Takeaway

When it comes to powering your home, you have many options and choosing your electricity provider is not a decision that should be taken lightly.

In this article

Join the Conversation