Learn how to compare energy providers and plans.
What is an energy provider?
An energy provider is a company that supplies electricity and gas to homes and businesses. In a deregulated energy market, an energy provider could own power plants and then use the utility company’s power lines to send energy to their customers. Energy providers can also purchase electricity and gas at wholesale rates and then supply them at competitive rates. Often, energy providers may have more flexibility and can provide lower rates than utility companies1.
An energy provider essentially acts as a price and contract regulator between utilities and end-users. Deregulated markets can have several different energy providers in any given region, giving consumers options for where they want their energy to come from. For example, an individual can look at all the energy suppliers available in their region to see which one has the lowest carbon footprint. Energy providers can then choose how they generate their electricity or purchase their wholesale electricity and gas. The consumer can see this information and then make informed decisions about spending their money to meet their energy demands. They can then choose that provider to help move the needle forward in the fight against climate change.
What is the difference between utilities and energy?
A utility company is an entity that facilitates the distribution and transmission of electricity, natural gas, water and sewage services. In some states, where the energy market is regulated, utility companies provide the only means for these services. In deregulated markets, an individual or business can use the utility company in their area or select an energy provider from a list of multiple providers that work in their area.
The utility companies own most of the energy infrastructure and are therefore responsible for attending to it when it becomes inoperable. For example, the utility company will most likely own all the power lines, transformers and sometimes even the power plants in a given region. But typically, the transformers, meters, and power lines are owned by the utility company. Therefore an energy provider will pay the utility company to use their electrical infrastructure to get electricity to your home or business. If there is severe weather and some power lines go down, it is the responsibility of the utility company to fix the power lines and to restore energy to all the homes and businesses affected2.
How do energy providers work?
Energy providers are customer-facing entities that work with power generation companies and transmission and distribution service providers. They are the point of contact for consumers to request, discontinue and negotiate contracts and rates — a.k.a., customer service representatives. Energy providers purchase wholesale electricity from power generation companies and then pay fees to transmission and distribution service providers to facilitate electricity transmission to you — the same works for natural gas. An energy provider will purchase wholesale natural gas from a gas supplier and then pay a utility company to transmit the gas through their network of gas pipelines. If your gas service is interrupted, it is still the utility company responsible for addressing the problem and returning gas service to your home or business. When it comes to contracts, rates and billing questions, you can work with the energy provider to settle all these matters. If you do not like your rate or do not like your service, you are free not to renew your contract and seek a new contract with another energy provider that provides services in your area.
How do you shop for energy plans?
If you are looking for energy plans for your home or business, you may have more options than you think.
Before shopping for a new energy plan, there are some questions you should ask yourself3:
What kind of energy do you need?
Determining what type of energy you need is one of the first steps toward picking the best energy plan for your home. Does everything run on electricity, or do you need a mix of both electricity and natural gas?
What is your current usage and rate?
Whether you have a paper copy or online access, you should review a recent statement to determine your usage and rate. Understanding your use and rate will help you shop for an energy plan that can save you money.
Do you live in a regulated or deregulated state?
If you live in a deregulated state, you will have more power to shop around for an energy provider. Deregulation laws are in place to give energy users the ability to choose the supplier of their choice.
Once you have researched your local market and needs, you can move on to shopping for suppliers.
How do I compare energy providers?
While you may access sites online that compare providers, they may be biased towards one supplier over another. To compare energy providers equally, you should gather your information, learn about the company itself and its values, and read information about their plans and pricing. If you have the opportunity to use a company that provides renewable energy, you can be a part of reducing your carbon footprint while accessing the power you need. You can also read customer reviews to gauge how a company does business, but reviews may have a wide range of opinions depending on certain factors.
How do I choose an energy company?
In theory, choosing an energy company should not be very difficult. The first thing you may want to do is check which energy companies are licensed to provide energy services in your state and locality. You will also want to determine how each energy company generates the power you will receive. Do they use coal or natural gas to generate electricity? Maybe they use only hydroelectric power? Once you narrow down the list of energy companies, you will then want to review their rates. Do the rates include sales tax? Are there any additional charges or fees that you should know about? The information should be presented to you clearly, and it should be easy to understand. If it is not, then you may want to consider a different energy company that values transparency.
Next, you will want to compare your current costs to the potential costs of any new energy company. If you find a company that can save you money, that generates electricity in a way that you are ethically comfortable with, and that is a licensed provider in your area, then be sure that they have an excellent customer service reputation. You can ask friends or family, look for online reviews, or search social media for any historical trends of consistent complaints against the company and its customer service practices4.
How do I switch my energy supplier?
Once you have selected the energy supplier, they should help you with the setup process. The process may take a few weeks to switch providers, so make sure you plan accordingly. Of course, you’ll probably need to notify your existing supplier that you need to cancel the service.
When should you switch energy suppliers?
The best time to switch energy suppliers is when demand is low or during months when the weather is milder. When energy demand peaks in July, August, December and January, the energy price can be highest. This is not a good time to lock in a rate for a new contract. Instead, you will want to shop for energy suppliers during the milder spring and autumn months when people are not heating and cooling their homes5.
Is switching energy suppliers worth it?
Before you decide to switch energy suppliers, you should know two key points. First, if you have unreliable service in your home, the problem lies not with the energy supplier but the utility company. Second, whichever energy suppliers you are considering, you will need to make sure they are licensed in your state to sell energy through a public utility. The public utility company is responsible for upgrading all poles and wires to ensure homes and businesses get the energy they need consistently and without issue6.
If you find a licensed energy supplier that can help you save money, give you a fixed-rate contract, or offer any other incentives that make switching suppliers beneficial to you, then yes, it may be worth it to switch. As an Inspire member, you can access clean energy for one flat monthly price and reduce your home's carbon emissions.
So how does it work?
To get started, visit our homepage and enter your address and/or ZIP Code. Discover the beginning of consistent and predictable monthly energy bills when you become an Inspire member.