How to cancel your electricity contract with your provider
There are many advantages to changing your electrical service, including finding a better price, switching to a company with better customer service, and finding a distributor with a green appeal.
It’s easiest to end your service when a contract ends, but sometimes it makes sense to switch early. For instance, you may find that you’re paying significantly higher rates than the current market rates, your electric company may have made changes you don’t like, or you may have simply lost faith in the company and its business practices. No matter the reason, you’ll need to cancel your electricity service, even if you have a contract with your energy provider.
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There are three main entities in this market: Generators, Transmission and Distribution Utilities (TDUs), and retail electric providers (REPs). Generators produce electricity, and TDUs provide and maintain the infrastructure to deliver energy. The REPs are the salespeople. They are the companies that homeowners like you will primarily be interacting with as you purchase your electricity plan each year (or however long you sign a contract for).
One of the key impacts of deregulation is that REPs are not required to notify customers that their plans are about to expire until 30 days prior. Keeping track of your contract’s expiration dates, doing research to determine the most affordable new plans, and renewing or switching contracts are all up to you. This can make dealing with a contract end date a hassle. Failure to act can result in automatically being placed on a monthly plan with variable or higher fixed rates that will shock you at the end of the month.
What Electricity Plans Are Available?
There are two main types of electricity plans available that are designed to cater to different needs and preferences. These plans have their own pricing models and can be divided into the following two categories:
Fixed-Rate Plans
- Locked in rate, no surprises!
- Makes monthly budgeting easier
- Consistent and predictable bills
Variable-Rate Plans
- Based on market prices and trends
- Unexpected and unpredictable spikes
- Changes by the month
Fixed-rate plans offer a set electricity rate that remains constant throughout the contract term. The rate is usually expressed as cents per kilowatt-hour (kWh). These plans can provide stability but can have penalties for early termination. Also, if the market shifts and prices fall, you could be spending more than you need to if you signed up for a long-term contract. Variable-rate plans, by contrast, have rates that can fluctuate monthly based on market conditions. This can mean a lower bill during periods of low demand but can have a higher bill in the heat of summer as rates skyrocket.
