Seventeen states and the District of Columbia have adopted electric retail choice programs that allow end-use customers to buy electricity from competitive retail suppliers. Here’s an overview about how these programs work.
What is Electric Choice
Electric choice is the result of electricity deregulation meaning if you live where deregulation has taken place, you no longer have to purchase your electricity from a municipally-owned power generator. You now have freedom of choice in selecting a provider, which can mean lower rates or purchasing electricity from greener sources.
Do your Homework
Not all retail electricity suppliers operate in the same manner. There are different fee structures depending on time of day usage or flat rates that may apply, and some providers may offer a locked-in rate for the duration of a pre-determined contract. Some providers charge a fee to transfer your service, which may cause your overall savings to be little or nothing. Your current provider may allow a budget plan rather than billing based on usage each month; not all retail suppliers allow this billing method. Do your homework and research the options available in your area before you make the switch.
How to Make the Switch
Your electricity will still come to your home through the same wiring and electric poles as before choosing a new supplier. When you decide which provider will give you your best choice, simply call them and ask them to make the switch for you. They will notify your current electricity supplier, and your billing will be transferred to the new company. The transfer for your purposes is only on paper, and not in equipment or wiring.
Rationale for Different Rates
Retail electricity suppliers either purchase electricity units or generate them through various sources. These companies thereby own units of electricity that are supplied to the “grid” that distributes electricity. This can be accomplished through generation of electricity from windmills, solar panels and non-renewable resources such as coal. The individual companies can then set their rates on electricity according to their own costs and desired profit levels. Although you will not notice a change in your electricity service, you will be billed by the company you are purchasing your electricity from once you make the switch.
Contracts, Fees and Cancellations
It is very important that you study the terms before switching to a new electricity provider. Contracts may vary in length and not all will guarantee your signing rate for the duration. There may be fees involved in for not only the service transfer, but also monthly fees for maintaining an account. If you wish to cancel the agreement for any reason, make sure you know what fees are involved, if any.
Making a Smart Electric Choice
Now that you know how electric choice works, you have the tools you require to make an informed decision. If you do your homework and pay attention to the details, you will be able to make the best choice for your electricity needs.
About the Author
Ruth Samuels is a professional financial advisor. She enjoys writing and helping readers save their hard earned dollars. Visit SaveOnEnergy to get more ideas and information.
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