Watch Out for These Red Flags When Choosing Your Energy Provider

Shopping for an energy plan? Learn how to spot these red flags and avoid getting locked into a bad rate.

Alexandra Jones Contributor
Alexandra Jones is a CNET contributor who writes about food, farming, gardening, and climate change. Her work has been published in USA Today, Forbes Food & Wine, Ambrook Research, and the Philadelphia Inquirer, among others.
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Alexandra Jones
6 min read
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You need to be on the lookout for bad actors everywhere -- even when you're shopping for an electricity provider.

If you live in a state with a deregulated energy market, you may have to choose your energy provider and be faced with weeding out the good from the bad. With so many different suppliers to choose from, it can be difficult to tell which energy suppliers are reputable and which ones you're better off avoiding.  

There are ways to protect yourself from falling victim to unscrupulous companies. With the right information and a dose of skepticism, we can help you spot energy supplier red flags and steer clear of potential bad actors.

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Here's how to spot a bad energy supplier and what you can do if you find yourself locked into a bad deal. 

How to avoid a bad energy supplier

The best way to avoid getting burned by an energy supplier is to do a little research beforehand. Reading online reviews and customer satisfaction scores is a good place to start. 

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"If you see great rates from an organization that has really good satisfaction scores, maybe there's something to it, Robert Brook, senior vice president and managing director at Neara, an electric utility software company, told CNET. "But if you see great rates and really poor satisfaction scores, that's a statement right there."

In addition to reading online reviews, you can also ask friends and neighbors for recommendations. They might even tell you which suppliers to avoid. Your state's public utility commission will have a list of PUC-approved suppliers on its website. Experts recommend that you take a look through this list before signing a contract. 

Each electricity plan has the real costs of the plan outlined within the electricity facts label, also known as the EFL or fact sheet. Make sure to comb through each EFL and understand all the implications and fine print before signing anything.

"If they're not listed on the state's supplier website, that's a massive red flag," Christine Ciavardini, a client relationship manager with MD Energy Advisors, told CNET. 

She says you might get calls or solicitations from suppliers, brokers or other middlemen. However, that doesn't necessarily mean these companies are illegitimate. They should make their role in the market clear to you within the first few minutes of a call. 

"If they're saying they're a supplier, they should be listed on the state's [PUC] website as a supplier," Ciavardini said. 

Common red flags from energy companies

Shady energy suppliers will use certain tactics to get you to sign a contract with them. It's important to know what to be on the lookout for so you don't fall for their traps. Here are some warning signs to watch for as you're researching and vetting energy companies. 

1. High-pressure sales tactics

Some energy suppliers use aggressive sales tactics to pressure you into signing up for their services. Be wary of any company that tries to push you into making a quick decision, doesn't provide clear information when requested, or makes promises that sound too good to be true. 

"If a supplier is guaranteeing you savings, those words are a red flag for me," Ciavardini said. 

2. Unclear pricing

Beware of energy plans with complicated pricing structures, variable rates or hidden fees. It's essential to understand the details of a plan before you finalize an agreement.

"Going through the fine print is usually where you'll find the gotchas," Brook said. That's where the fact sheet, or EFL comes in. "Understanding the differences between types of contracts is really important to making a good choice for yourself."

Even fixed-rate plans can fluctuate if they're tied to market rates, Ciavardini said, so it's especially important to read through the language of the contract you're signing. 

"Over the last few years, a lot of energy suppliers have started calling their product 'fixed,' and it's not exactly fixed," she said. "As different components change in the market, they will make adjustments to your rate."

3. Poor customer service

If a company's customer service team isn't very helpful or responsive, that's not a good sign. Having difficulty reaching a representative or getting answers to your questions is a good indication that the company might not be accessible down the road when you need them. 

4. A plan you didn't sign up for

Your energy supplier could change without your knowledge, whether you were actively shopping for another supplier or not. A new supplier could get ahold of your account number and personal information and convince your utility that you've signed on with them, switching you to their plan without your consent.

Ciavardini said this scenario is called "slamming." (When a supplier signs you up for their services without your authorization.) And it's not uncommon.

"The good thing is that utilities have done a lot to try to protect the consumer," she said. "You can call your utility and say, 'I don't know who this is, I never signed anything,' and it kills the deal."

Tips for avoiding a bad energy deal

To avoid getting yourself locked into bad deal, here's a few best practices to follow:

  • Be skeptical of phone or door-to-door solicitations from companies claiming to be energy suppliers.
  • Protect your personal information, especially your social security number and account number. When you do choose an energy supplier you'll need to provide this information. Do not provide this information until after you've fully vetted the company and energy plan you're interested in. 
  • Check your energy bills often and keep an eye out for notices from your utility about changes that may have been made to your supplier. Reach out to them immediately if you notice any suspicious emails or activity regarding your accont.

Understanding an energy plan

You'll want to carefully review the details of your energy plan before signing anything. Every energy plan comes with an electricity facts label and it's crucial that you pay attention to yours. 

This document includes information about a specific plan's rates, charges, fees, the length of your contract and the percentage of your power that comes from renewable energy sources, like solar. Since EFLs contain similar details and formatting, they can be used to compare multiple energy plans to help you find the best fit. 

"Read through the label, and if you see something that you don't understand, don't hesitate to contact the organization to ask them. Everything should be clear to you," Brook said.

What to do if you sign up for a bad energy plan

If you find yourself locked into a bad energy plan, don't panic. In many cases, you have options. The first of which is to contact your energy supplier and try to negotiate a resolution. 

"If you were misled, or you signed up for something completely different than what was laid out to you, you can certainly file a complaint through the state," Ciavardini says. "Most states do ask that you try to resolve it through the supplier first, or at least try to make contact with them."

If you're unable to resolve the issue with your supplier directly, you can file a complaint with your state's public utility commission or consumer protection agency. Some states offer programs that allow consumers to switch suppliers without penalty if they feel they've been misled or deceived.

Energy supplier shopping requires careful consideration and a keen eye. Thoroughly vetting suppliers before signing on can keep you from falling victim to predatory practices and ensure you're getting the best energy plan for your household. Take the time to find a reputable supplier that meets your needs and priorities.