A Complete Guide: How to Find Lower Energy Rates
Trying to Find Lower Energy Rates? Welcome To A Complete Energy Shopper’s Guide Here’s everything you need to know about
Trying to Find Lower Energy Rates? Welcome To A Complete Energy Shopper’s Guide Here’s everything you need to know about
No one likes to pay more for things than they need to. Energy is no different. That’s why energy choice exists. It exists to give you – the consumer – a choice about your energy rates, your energy plans, and how you use your energy.
The energy choice program is a program that has been made available to you by your state. However, many people in qualifying states don’t even know they have a choice.
If you’re not familiar with energy choice, consider it similar to choosing a phone plan but for your energy, which is to say your electricity and natural gas. Like shopping for a phone plan you can compare different phone carriers (or in our case “energy providers”), compare different rates, compare different plans, and choose between contracts or no-contracts.
If your state offers energy choice or has “deregulated” it’s energy market, it means you are able to compare different energy providers, compare their energy rates, compare the different energy plans they offer, and even choose green energy options, which ensures the electricity you use is sourced from renewable energy.
The result is energy savings, lower energy rates, and stable energy bills that don’t fluctuate out of control depending on the season, or some other unknown reason.
For larger energy users, finding lower energy rates and securing the right energy plan can mean thousands if not millions of dollars in energy savings. But, no matter how much energy you use, comparing energy rates offers many benefits.
In this article, you will find all the information you need to know when looking for lower electricity or natural gas rates for your home or business.
I’ve also made a simplified version of this article in the form of a free e-book which you can download for future reference and use.
As this article is quite long, for your convenience, I’ve put quick links to each of the main subjects discussed in this article. You can click on any of the below subject lines and you will be immediately taken to the part of this article that covers that subject:
“What, I can choose my own energy rates?”, “Electricity comes in different plans?, “Are energy savings really so simple?”… right?!
I know, if you have not yet taken advantage of the energy choice program, all this can seem kind of new or “untried”. So I thought it would be good to start this article with a quick discussion on why the energy choice program exists.
You’d be surprised that a lot of qualifying customers don’t fully understand it, and not understanding it, consider it a potential scam, risky, or are simply not interested. Unfortunately, these people, be it homeowners or businesses, are paying a lot more than they could be and are missing out on significant energy savings.
That’s why I’m happy that you are reading this article. I hope that by understanding the energy choice program better, you can save money by finding lower energy rates.
To best explain this I thought it would be best to start by considering the opposite of energy choice, no choice or a “regulated” energy market.
Having no choice over your energy provider, you connect to your local utility and you pay whatever price or rate they charge for electricity or natural gas.
Have you ever looked at your electricity bill and thought it was too high? But then reluctantly paid it anyway? That’s because you didn’t have a choice.
Or, have you ever seen your electricity bill get much higher in the summer and winter? Sure, you do use more electricity during the summer and winter months, but so does everyone else. What you may not realize is that due to the increased general energy demand, utilities increase their energy rates (prices) and you end up paying a lot more for your electricity then you normally do.
Every utility manages their rates differently, but like any business, their rates are calculated to keep them profitable and in business. The problem is, not having any competition, they don’t need to price competitively.
Competition in business means lower rates, better plans, and better customer service. Also check out this video that covers the importance of competition in finding lower energy rates.
Now let’s look at the other side of the coin – energy choice or energy deregulation.
Energy choice empower you to be save money on energy by choosing an energy provider with a better energy plan and lower energy rates.
While not all states offer energy choice, the states that “deregulated” their energy market did so because they recognized local utilities as a monopoly. As a result, millions of home and business owners have been able to save countless billions on energy costs
Just to recap, in its simplicity, having energy choice means that you are able to compare energy providers, compare their energy rates, choose the best energy plans, and so save money on your your electricity or natural gas. Energy choice is also known as “energy deregulation”.
Since 1977, lawmakers in select states (“deregulated states”) began changing the laws and regulations concerning energy and how it’s sold. If you are interested in how this came about, I also found this interesting article that covers the history and time of energy deregulation.
These new rules allow individual/private energy providers to offer electricity and natural gas directly to consumers – you.
By default, the energy you consume is supplied to your home or business by your local utility and you pay whatever rates your local utility charges. If your electricity or natural gas supply is supplied by your local utility you’re paying what we call a “default rate”.
A utility’s default rate routinely increases or decreases depending on the time of year, and on supply and demand factors. But in general, overtime, a utility’s electricity rates always increase.
Of course during periods of less energy demand, such as spring and fall, energy rates tend to drop a little because homes and businesses don’t use as much energy to cool or heat their property. But you’ve most likely noticed that during summer and winter periods, rates go up, and so does your electricity bill.
Most utilities make their default rates known on their website. Some utilities post rates for periods lasting 3 to 6 months, meaning rates will stay the same throughout that period. Other utilities post their rates monthly, and some utilities require a calculation of different factors to tell you what rate you will pay.
Seeing the utility companies as a monopoly, some states opened their energy market, allowing for retail energy providers to offer competitive electricity and natural gas rates.
With energy choice, you can now shop and compare energy suppliers who offer competitive energy rates and multiple different energy plans.
Today, one of the best ways to lower your monthly energy bills is to find a new energy provider who provides lower energy rates and a better plan.
When energy deregulation laws were being passed, the utilities were allowed to maintain ownership of the physical infrastructure, meaning the poles, wires, transformers, and so on. After all they did do all the work to build and maintain them.
When you choose a new energy provider, the electricity itself will still be delivered to your home through your local utility’s infrastructure and you will stay pay a delivery or transmission fee to your utility, but the actual supply of electricity will come from whatever new energy provider you chose, and you’ll be paying less for it.
With retail energy providers competing for your business, one of the biggest benefits of energy deregulation is being able to find and secure lower energy rates for your home or business.
But that’s not the only benefit.
Being able to compare energy rates and compare energy providers provides many benefits, here are the four biggest benefits you will experience when taking advantage of energy deregulation or the energy choice program:
Energy savings is the most obvious benefit of being able to find lower energy rates. If you are new to the program, you can easily experience energy savings between 10-25 percent. And, as you continue to take advantage of energy choice you start to see some of the other benefits as well.
When finding lower energy rates one of the most popular energy plans is what’s called a “fixed-rate” option. A fixed-rate energy option allows you to choose a length of time that your rate is guaranteed, meaning if you find electricity at 5 cents, and choose a two year fixed-rate plan, that means for those entire two years you will always pay 5 cents for your electricity.
This is advantageous for two reasons:
1. As I discussed earlier, utilities change their energy rates depending on supply and demand as well as weather. Retail energy providers also change their rates based on the energy markets. Having a fixed rate plan will help you avoid fluctuating energy bills.
2. Over time, as the general demand for electricity and natural gas grows, so do energy rates. Just like the price of gas for your car, electric and natural gas rates are routinely adjusted based on the market. Just like many years ago gas used to cost a lot less, so did energy. And while over a 12 month period, energy rates could dip and then go up, and then dip again, in the main energy rates increase each year.
Energy choice protects you against fluctuations and increases in your electric and natural gas bills. Here’s a simple example of how finding lower energy rates can provide energy savings:
Let’s say you own a small business and you use 100,000 kilowatt-hour (KWH) of electricity a year.
If you’re utility charges you 6 cents per KWH you would pay $6,000 a year.
But… let’s say that during the summer and winter months the utility increased their rates to 10 cents. If we include those increased rates for a period of 6 months, you would be paying $8,000 a year.
However, every year electricity rates tend to increase by 3-4%. So let’s say the next year you’re paying 6.5 cents during the low demand months and 11 cents during the 6 high-demand months. That second year you’d pay $8,750 for electricity.
In two years you will have paid $16,750.
Now let’s say that you found a retail energy provider that could offer you a fix energy rate at 7 cents for that same two year period. 7 cents may seem a bit higher than what you pay during the low-demand periods, however over time it balances out.
At 7 cents, you’d pay $14,000 for your electricity because the rate never fluctuates. And you’d save your small business $2,750.
On top of that, you’d have the ability to better control your energy spend because if you ever wanted to pay less all you’d have to do is figure out how to use a little less energy each month.
Fixed-rate plans are the most popular kind of energy agreement and provide complete budget certainty as you’ll have complete control over your bill by monitoring and controlling your energy use.
As producing clean energy and reducing emissions is becoming more and more critical, retail energy providers have invested and will continue to invest in massive wind and solar farms as well as other ways to produce renewable green energy.
Today, when you shop for lower energy rates you will see energy rates and agreements that provide you with electricity that is produced from renewable energy sources.
If your company has sustainable energy goals, you can also purchase renewable energy certificates (RECs) which certify that the energy you use comes from renewable energy sources, helping you meet your company’s green energy initiatives.
You’ll not only be able to reduce your energy bills by finding lower energy rates, but you’ll feel good about it too knowing that the energy you use is not adding to the planet’s pollution problem.
And it’s good for your business since recent consumer surveys found that customers prefer people-friendly and environment-friendly organizations, and 55% of those respondents said they’d be willing to pay more for products or services from companies that committed to positive social and environmental impact.
At the end of the day, one of the most relieving advantages of energy choice is that you have control over your energy bills.
For the longest time, your energy bills were just something you had to pay or you’d have no lights. In fact, the concept of having control and having choice over your energy rates is still new to a lot of people, and in many states still isn’t available.
But if you live in a deregulated energy state, you have a choice and so you have control.
I’ve written a lot of background information about the energy choice program, now I will dive into how it works and how to find lower energy rates.
Earlier in this article I touched on the fact that your local utility still owns the physical poles, wires, transformers, and so on used to delivery your electricity, while the electricity itself can be produced and delivered by your utility or a retail energy provider.
For that reason your electricity bill is split into two parts:
Delivery charges constitute all the fees required to transfer electricity or natural gas through the grid or through pipes to your home. Whether you stick with your utility, or choose a retail energy provider, you will continue to pay delivery or transmission charges to your local utility.
Supply charges make up the payments you make for the amount of electricity or natural gas you use. The supply portion of your energy bill is how energy choice can help you lower your monthly electric bill.
By default, you receive your electricity or natural gas from your local utility. But by choosing a new retail energy provider with a lower energy rate, you can effectively reduce how much you pay for the supply portion of your bill.
Here you can see a sample electric bill that shows the two main kinds of charges.
For the sake of this example I am using a bill from the Philadelphia Electric Company (PECO). While not all electric or natural gas bills look the same or may not have the same wording or language, most of them will show your charges as delivery and supply charges separately.
This is a commonly asked question, so I thought I’d answer it here in this article:
Hundreds of retail energy providers exist all across the U.S., however when you are comparing energy providers or shopping for lower energy rates you will only be able to see those energy providers that are already set up to deliver energy supply to your home or business, using your local utility’s grid.
This means that when you choose a new energy supplier, you will not experience any change in power-quality nor will you experience any delays or any interruptions in service.
The only thing that will change is the rate that you pay for your energy supply itself.
When you select a rate and a plan, you will have be able to choose your start date for that new rate and plan. Usually that will be your next billing period or a future start date that picks up when your current energy agreement ends.
On the chosen start-date, you will start receiving your energy supply from the new supplier you chose, and start paying the new rate you selected.
Choosing a new retail energy supplier and a new rate only impacts the supply portion of your electric or natural gas bill.
For more information about how energy deregulation works check out, How Does Energy Deregulation Work?
A quick answer to this question is “No“.
As mentioned above, all the retail energy providers you can choose from are already connected to your local utility and already service thousands if not millions of energy customers in your area.
Switching to a retail energy supplier does not usually change your billing cycle. In 99% of cases, you will you not be receiving two separate bills. Your bills will still come from your local utility and you will still pay the bill through the utility.
The utility will deal with splitting the costs of your deliver and forwarding your supply payments to whatever energy provider you chose.
Most utilities will specify on your energy bill that your supply is coming from a specific provider, whichever one you chose, as well as the new rate you are paying per kilowatt-hour.
Below you can see two more sample electricity bills that show where your electricity supply is coming from. As you can see on the bill to the right, many utility bills also contain instructions on how to shop for lower energy rates since this is a program made available to you by your local legislature.
The above map shows which states offer energy choice or have deregulated their energy markets.
As you can see, not all states have deregulated their energy market.
Additionally, in some states you can choose your provider for electricity and natural gas, while in other states you can only choose one or the other.
Lastly, there may be some counties or co-ops in deregulated states that do not offer energy choice, while these are rare they do exist. Although few, there could still be specific utility zones or areas of a deregulated state where energy is still regulated.
But in the main, if you live in one of the colored states on the above map, you should compare energy providers and their rates to see if you can save money on energy.
North Carolina **
South Carolina **
* These states have energy choices for electric, natural gas, or both, however, they have limitations, restrictions, and some times require an application. If you live in one of these states and want to take advantage of energy deregulation, please contact one of our Professional Energy Managers for advice by calling (844) 674-5465.
** These states do not have energy choice however in a few cases where commercial properties use a lot of natural gas, we may be able to negotiate better rates through a private supplier.
To read more about your energy choices by state read, Which States Have Energy Deregulation? or check out the YouTube video:
To kind of simplify all this, there are really four main points you will be looking for when comparing energy providers, finding lower energy rates, and reducing your energy costs:
I’ve mentioned “kilowatt-hour” or “KWH” a lot in this article and since it has a lot to do with your energy choice, I thought it would be to talk a bit about what it is and how it related to finding lower energy rates, and ultimately energy savings.
Every month your electricity bill tells you how much electricity you’ve consumed. It also tells you the rate you pay for each individual unit of energy you used.
That unit of energy is called a kilowatt-hour or KWH.
In its simplicity, a kilowatt-hour is a unit that your utility company uses to measure how much electricity your home or business used over a period of time. That’s really all it is.
When we talk about finding “lower energy rates” or “comparing energy providers” and “competitive energy rates”, we’re talking about finding a better price per kilowatt-hour.
The rate you pay for each kilowatt-hour will always be listed on your electric bill, sometimes also written as “KWH”. On this sample electric bill, you can see that this customer is paying a little under 6.5 cents for each KWH that they use.
To better understand how kilowatt-hours add up, let’s take a light bulb as an example.
When you buy a light bulb the packaging usually tells you how much watts it uses. Most electrical supplies or appliances will note this too. A “watt” is a measurement that tells you how much electricity or power a piece of equipment or appliance needs in order to run.
A 100-watt light bulb uses 100 watts.
A kilowatt is 1,000 watts (the word kilo = 1,000).
So, if you leave a 100-watt light bulb on for ten hours, it uses 1,000 watts and your meter registers “1 KWH”.
In the above sample bill, the rate for 1 kilowatt-hour of electricity is $0.06408 cents.
So, if you leave a 100-watt light bulb on for ten hours it will cost you about 6 and a half cents.
If that light bulb is on every day for 10 hours, in a month that one light bulb will use 30 KWHs and will cost you roughly $2.
Larger pieces of equipment and machinery use a lot more watts.
An energy-star rated washing machines takes about 500 watts to run for 1 hour. A drier on the other hand uses about 3,000 watts every 45 minutes. Your average home fridge uses between 500-700 watts each hour, being on 24 hours in a day, it uses between 12 and 17 KWH per day.
While a kilowatt-hour is just a unit that your utility company uses to measure how much electricity your home or business used over a period of time, you can use it as a way to better control your energy costs and when finding lower energy rates, as a way to calculate energy savings.
For more information about kilowatt-hours also read, What is a Kilowatt-Hour? A Very Simple Explanation.
The two most important factors in energy shopping are:
When comparing retail energy providers and finding lower energy rates, the rate itself and the contract itself are the two factors you want to make sure you understand.
Sometimes, the lowest energy rate is not necessarily the best due to restrictions that can be contained in the plan itself. Other times, providers may offer a very low introducotry energy rate but later increase the rates.
To help you better understand how to shop for lower energy rates, check out this video that covers 6 common mistakes that you will want to avoid when comparing energy providers or looking for lower energy rates:
Alright, so let’s talk a bit about the differen plans that can be offered by energy providers, or rather, the two most common plans that, in most cases, provide the most benefits.
When shopping for lower energy rates, the most attractive figure is of course the energy rate itself, meaning how much are you paying per kilowatt-hour?
Earlier in this article I gave examples of how kilowatt-hours and energy rates are calculated but just to recap, energy rates are calculated in cents and factions of cents, for example you could find a rate of 6.408 cents per kilowatt-hour.
If you’re paying 6.408 cents per KWH and you find an energy provider that can offer you a rate of 5 cents per KWH, you’ve saves money! Simple right?! Yes, in essence it is simple, however the “rate” is not necessarily all you should look at.
When choosing lower energy rates, you’re essentially making an agreement with a retail energy provider. We call this an energy plan, also called an agreement or contract.
In order to provide competitive rates retail energy providers have to know that you’ll use an estimated amount of energy over a specific period of time. This allows them to safely buy and trade energy at competitive rates, and gaurentee you those rates.
Knowing that, they can then buy that energy wholesale and provide it to you at a lower rate than your utility does. Your agreement, plan, or contract tells the supplier that you’re going to be using “blah” amount of energy over “blah” amount of time. They use your electricity bills and historical usage information to estimate it.
To protect both sides, energy plans/agreements come with terms and conditions.
Depending on how much energy you use, the length of your contract, the energy plan you choose, and the retail energy provider, the terms and conditions can vary.
It would be impossible for me to try and explain all the various rules connected to agreements, but I will say that it’s important that you review and understand them before making a switch. That’s not to say it’s “dangerous” or “scary”, I’m just saying it’s important for you to know what the agreement is between you and your new energy provider.
The two most popular energy plans are:
In essence these plans are very straight forward.
A fixed-rate energy plan allows you to select an energy rate and secure that rate for the entire length or term of your energy agreement/plan.
If you secured a rate of 8 cents per kilowatt-hour for 48 months, you’d pay that same rate for every kilowatt-hour for the next four years. No matter how high the market goes, you’re always paying the same amount.
This is the most popular plan amongst energy shoppers because it provides protection against the market’s fluctuations, as well as budget certainty and control.
A variable-rate energy plan is a month-to-month agreement. This means your energy rate my change each month, going up or down, depending on the market, as well as whatever additional fees your supplier my add to it.
A variable-rate energy plan is helpful when you’re entering into an agreement at a high market, or when you see the market is steadily decreasing.
A variable-rate energy plan could buy you the time you need to enter a fixed-rate plan at a good rate.
No matter what energy-rate plan you choose, it’s always important to read the terms and conditions of your agreement. We’ve run into businesses that were grossly overpaying for energy because they had entered into a variable rate agreement at a very low introductory rate, which slowly increased over time.
If your company uses a lot of energy and you want to hedge against the market, our energy consultants can suggest more intricate plans tailored to your energy needs. However, if you own a home or a small business, the two above plans would work.
While a fixed-rate energy agreement is not the only kind of energy plan that exists, it is the most popular plan and has provided millions of homes and businesses with countless missions in energy savings, not to mention a stable energy budget and predictability.
When shopping for lower energy rates you will have the option to contract fixed-energy-rates for a determined period of time.
Most small-medium sized businesses secure their energy rates for a 3-to-4-year period. However, depending on the provider and the market, energy providers can offer fixed-rate contracts for up to 7 years, thereby presenting a possibility for further energy savings.
If you are not comfortable with a long-term agreement, you can also secure rates for as little as 3 or 6 months, and also 1-2 years.
Energy providers can guarantee your rates because they are able to see an estimate of how much energy you use over a 12-month period and using that estimate they can buy enough energy to cover your contract at market price or future market price. This allows them to always offer competitive rates compared to whatever the local utility or other energy providers are offering at that point in time.
When looking at how long to secure rates for take into consideration these four factors:
For organizations that use a lot of energy, such as a hospital or an industrial plant, the energy market’s conditions play a major factor in determining how long to secure energy rates for. For example, in the case of an increasing market, a longer-term energy agreement would mean a lot of savings. In the case of an unstable or down market, shorter-term agreements may be an option until the market levels out.
No matter the size of your business, if you have any question as to how to find the best energy rates, trying to decide which energy provider or plan is best for your business the thing to do would be to speak to a professional energy consultant.
At Energy Professionals, we can use a copy of your electricity bill to not only help you find the best energy provider and plan to fit your energy needs, but we also use our long-standing relationships with America’s largest energy providers to help find you even lower or more competitive energy rates.
At last, the “how”.
If you own a home or business in a deregulated energy state, this section will tell you how to find lower energy rates.
There are two main ways to find competitive energy rates and options:
As we quickly shift to more and more online experiences, today, many online platforms exist where you can type in your zip code and find competitive energy rates.
These platforms are great because they give you quick and easy access to multiple suppliers, rates, options, and contract terms. Signing up usually takes no longer than 15 minutes and you’re on your way to energy savings!
However, one very important thing to keep in mind is that the “lowest” rate is not always the best rate.
Sometimes you forget to read the fine print and don’t notice that the “low rate” you found was actually an intro rate that slowly increases over time.
Sometimes you sign up for a great rate, but it comes with heavy rules and restrictions or hefty cancelation fees.
But in the main, as long as you are aware of what you’re signing, online platforms are a great way to compare and find lower energy rates.
Another very common way to find lower energy rates is by contacting an energy advisor or consultant. Check out my article, What Does an Energy Consultant Do?
If you own or manage the accounts for a small, medium, or even a larger business, an energy advisor will help you realize energy savings by finding lower prices, fitting contract terms, reviewing the contract language with you to make sure there are no hidden fees or penalties, and overall balancing your risk tolerance.
Energy advisors have direct connections to most energy suppliers in your area and so are able to get lower rates by going directly to the supplier.
Additionally, they can advise on what contracts best fit your energy usage patterns, and work to protect you and your business.
Energy advisors can also help protect your business against increase energy supply costs by securing competitive pricing on fixed-rate contracts that guarantee your rate from anywhere between six months to seven years!
As a rule of thumb, if you’re shopping for lower energy rates for your home or a small business that uses less than 100,000 KWH a year, then an online platform is a great option. Just be sure to read the contract terms and conditions.
If your business uses more than 100,000 KWH a year then it would be worth speaking to an Energy Advisor to find that extra 2-3 fractions of a cent lower rate because if you use a lot of energy, those small fractions add up to a significant amount of savings.
And that’s kind of the rule of thumb.
If you use over 1,000,000 KWH in a year or have multiple locations in multiple states that use a lot of energy, then an energy advisor is definitely your best way to find and contract lower energy rates.
At Energy Professionals, we can even qualify you for a unique reverse auction process, where the top suppliers in your areas compete for your business by bringing their absolute lowest rates to the table, providing you with substantial savings!
To speak to a professional and licensed energy consultant call: 844 674 5465
If you use a decent amount of electricity or natural gas, which is to say if you spend $1,000 a month or more on energy, your best bet would be to speak to a licensed energy consultant to try and compare energy providers and to find lower energy rates with an energy plan that best fits your business.
Energy consultants can help find lower rates than you can find online and will also help make sure you have access to all possibile energy providers in your utility zone, and ensure you find the plan that best fits your needs.
For most energy consultants, finding you the lowest energy rates and maximizing your savings is in their best interest. They get paid directly by the provider and so there is never any cost to you.
Let’s liken this to an airplane ticket.
Not too long ago, most people purchased airplane tickets through a travel agency. Although today travel agents still exist, most people can easily and confidentally buy a flight online or with an app.
However, what if you had to buy 20 tickets, and plan a 30 day vacation, with multiple cities, multiple activites, and multiple hotels. At that point, you may want to reach out to someone who will do the work for you, make it easier, find the best prices, and should anything go wrong help you sort it out while you’re on your trip.
Energy consultants work with small, medium, and large businesses to make navigating energy shopping simple and to realize the biggest savings possible. Also check out, What Does an Energy Consultant Do?
Energy choice offers homes and business an opportunity to save money on energy by comparing energy providers, energy rates, and plans.
Over the last 20 years, millions of homes and businesses have taken advantage of energy deregulation and as a result have saved more money then could fit into a calculator.
I hope that you have found this article helpful and informative. And most of all, I hope that with a better understanding of how energy deregulation works you can find lower energy rates.
if you ever have any questions, or need help in finding an energy provider or a lower energy rates never hesitate to call us to speak to an Energy Consultant. Our pricing process is obligation-free and our goal is always to find you the most competitive energy rates on the market.
Senior Editor, Energy Professionals
Energy Professionals is committed to finding its customers the best possible rates on electricity and natural gas. Tell us your location and service type and our energy manager will connect you to the most competitive offers.
Switching to an alternate supplier is easy. There is no chance of service disruption, and you'll continue with your current utility for energy delivery and emergency service. Take a few minutes to discover your best offers, and enjoy the benefits of retail energy in your home or business.
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