Energy Choice: How to Switch Your Electric Company

If you aren't happy with your electric company, you can switch -- if you live in a deregulated energy market. 

Currently, there are 18 US states with full or partial regions with deregulated energy choices such as gas, electric or both. If you live in one of these regions, you have the power to switch which company supplies your electricity and the price you pay for it. 

What deregulation does for the consumer is ensure you can choose from multiple companies and benefit from competitive pricing, more innovative services and the freedom to make your selection based on specific needs, said Jake Edie, an adjunct professor who teaches a course at the University of Illinois Chicago on clean energy in the electric grid. For example, renewable energy options or customer service may be what's important to you, and Edie says deregulation allows you to seek out your wants. 

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But just because you have the option to choose your electric supplier doesn't always mean you should. 

The choice to switch energy suppliers is a personal decision, Edie said. It could be for a better price or so you can source your power from clean renewable energy like solar, wind or hydro power. 

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Edie, who lives in a deregulated region of Illinois, switched suppliers so he could control where his electricity came from. Edie chose to change to a company that sources its power from clean solar energy.

Whatever your circumstances or motivations may be, gathering all the relevant information before switching energy suppliers is essential. Here's everything you need to know about how to switch energy suppliers in deregulated markets.

What is energy deregulation?

Energy deregulation is when governments reduce or ease regulations over electricity and gas markets to allow multiple companies to compete for business and eliminate regional monopolies. 

Edie says history shows that consumers paid higher electricity fees when a single utility company was responsible for generating, transmitting and distributing electricity in a specific area. Deregulation means consumers have a choice of who they buy their electricity from. Typically, deregulated markets tend to have more-competitive pricing and more consumer-friendly options. 

As much as there are some advantages to deregulation, there are also some disadvantages. For example, multiple providers offering services can be complicated for customers to navigate. Some deregulated markets have also faced price manipulation issues, making understanding your bill confusing for consumers. 

What's the difference between my electricity supplier and my utility?

Electricity supplier

Simply put, an electricity supplier -- or generating company -- produces electricity through various methods. These methods use multiple fuels like coal or biomass to rotate steam turbines to generate electricity. Alternative technologies include gas, wind, and hydro turbines, which use kinetic energy to drive these generators. In nuclear power plants, atoms are split to spin turbines and create electricity. Some clean energy-generating companies also use renewable energy sources like solar energy to generate electricity.

Utility or TDU

An electricity distributor, most commonly known as your utility or TDU (transmission distribution utility), is a company that manages the network of power lines and transformers needed to deliver electricity from the transmission system to your home or business. This company issues your monthly electric bill and separately charges for supply (the actual electricity used) and delivery (the electricity transport to your home). 

Your geographic location typically determines the distributor and isn't subject to change. However, while your distributor remains the same in a deregulated market, you can switch your electricity supplier or generating company. 

How to shop for an energy supplier 

Consumers should consider several factors when shopping for an energy supplier in a deregulated market. These include the price per kilowatt-hour (kWh), contract terms, the percentage of renewable energy offered and the supplier's reputation. It's also important to understand your current electricity usage, which can be found on your current utility bill.

Switching providers is a straightforward process and can be done online or over the phone, said Edie. Search for a consumer advocate organization such as your state's public utility commission (PUC) website, Edie said. The PUC's purpose is to safeguard consumer rights. Your local PUC maintains a list of approved suppliers in the state, he says.

Never share your electric bill with door-to-door sales people, Edie cautions. Unscrupulous salespeople may enroll you in their service without your knowledge by asking for your account information. 

How to switch energy suppliers

If you live in a deregulated state and decide that you want to switch your energy supplier, here are some actionable steps you can take:

1. Research and compare suppliers: Gather information on different energy suppliers in your area and compare pricing plans, contract terms and available services.
2. Evaluate your current energy usage: Review your current energy consumption and billing statements to determine your average energy usage and costs.
3. Check contract terms with your current supplier: Review the terms of your existing contract, including any termination fees or notice periods.
4. Identify potential new suppliers: Identify a few potential energy suppliers that meet your requirements and preferences.
5. Contact the new suppliers: Contact the selected suppliers to inquire about their services and pricing. Ask open-ended questions to clarify the details of their plans.
6. Obtain quotes and compare offers: Request quotes from the shortlisted suppliers and compare the quotes, considering pricing, contract terms, and any additional benefits or incentives.
7. Choose the best supplier: Evaluate the quotes and choose the energy supplier that offers the most favorable terms for your needs.
8. Initiate the switch: Contact the chosen supplier to initiate the switching process. Provide the necessary information and documentation as requested.
9. Confirm the switch: Follow up with the new supplier to ensure the switch has been processed successfully. Verify the start date of your new energy supply.
10. Notify your current supplier: Inform your current supplier about your decision to switch. Follow any required procedures for termination or cancellation.
11. Monitor the transition: Keep track of the switching process and ensure a smooth transition to the new supplier. Check your first bill from the new supplier to ensure accuracy.

Questions to ask as you compare potential energy suppliers 

If you're interested in switching your electric provider, here are a few important questions to ask:

• What are the available pricing plans and contract terms? You need to compare the costs of different providers and choose a plan that best suits your needs.
• Are there any additional fees or hidden charges? Asking about additional fees ensures that you clearly understand the total costs associated with the energy supply and helps you avoid unexpected expenses. 
• What is the source of the energy provided? Knowing the energy source is essential for environmentally conscious consumers who want to prioritize using renewable or clean energy options. 
• Are there any incentives or rewards programs available? Some suppliers offer incentives or rewards programs. Asking about these programs helps you maximize potential savings and additional perks.
• What is the supplier's customer service reputation? It is crucial to gauge the supplier's customer service reputation, as it can significantly impact your overall experience. You can gain insights into their responsiveness, reliability and ability to resolve issues promptly.

US states with deregulated electricity markets

According to the US Environmental Protection Agency, 13 states and the District of Columbia have completely deregulated or reorganized their electricity utilities.

An additional five states have partially deregulated or restructured their electricity utility market:

Correction, Aug. 18: This story originally presented as direct quotations some statements that were actually paraphrases of what the cited individual had said. Those passages have now been rendered appropriately as paraphrases.