If you’re looking to save on energy costs, knowing how to shop for energy plans can make all the difference. With multiple providers and options in deregulated markets, knowing how to compare energy offers is key for both residential and commercial energy customers. This page will cover the steps, tips, and red flags to look out for when shopping for electricity and gas plans so you can make an informed decision that suits you.
Changing Energy Suppliers
Switching energy plans or suppliers can help you secure competitive energy rates in deregulated states. Businesses can look for the best plans to manage costs, avoid peak demand charges, and potentially reduce pass-through charges on their bills. To ensure that the switch goes smoothly, it’s good to know your current contract terms, such as rescission periods or early termination fees, so you don’t get hit with unexpected penalties when you make the change. Read on to get tips from the experts on finding the best plans for your business.
Finding The Best Energy Plans For 2025
When shopping for the best energy plans, follow these general steps:
Assess Your Usage & Needs
Whether you are a small business, large industrial facility, or residential customer, the first step is to understand your energy usage and utility rate class. Start by looking at your energy usage. Knowing your demand patterns will help you find plans that match your business’s electricity usage. These factors determine the types of energy plans you can shop for and the total price for energy that you might pay. You can find this information on your utility bill. If you need help, try contacting a reputable energy broker or read this article on deciphering the anatomy of your electric bill.
Research Energy Providers
Next, it’s important to compare the various energy supply companies offering rates in the market. Some companies have a great reputation, while others do not. Decide which companies you are willing to contract with and eliminate others from your list. In deregulated markets, compare energy providers for their rates, contract terms, and bundled electricity and gas offers.
Compare Offers
Look for cost-effective options by looking at plan details, fixed vs variable rates, peak demand charges, and utility pass-through charges. It’s important to detail each component of the offer in order to compare apples to apples.
Understand Additional Fees
Watch out for add-ons like late payment fees, monthly subscription costs, enrollment fees, bandwidth clauses, and material change clauses. Sometimes, what appears to be the lowest rate is not achieved after calculating additional expenses tied to the plan.
Review Energy Market Trends
With energy prices fluctuating, timing your purchase can save you money. Volatile energy markets can cause prices to change from day to day. It’s best to consult with an energy broker to understand energy price forecasts.
Shopping for Electricity
Electricity prices can vary greatly depending on your usage and time of year, so it’s good to know how to shop for electricity. Here are some key things to remember:
Check for Peak Periods
Electricity demand charges can be high during peak hours. By choosing an energy plan with an off-peak rate, you can save substantially. These types of hybrid energy products are usually reserved for larger customers.
Understand Fixed vs Variable Rates
Fixed rates give you price stability, while variable rates may give you lower upfront costs but can fluctuate with the market. These rates are often tied to the spot or forward markets and need to be analyzed carefully. It’s important to consider your risk tolerance and goals when deciding to fix or float your electricity rates.
Consider Contract Terms
Not all energy companies are created equal. Most companies are transparent in their price offerings, while others are not. It’s important to read the fine print of each offer to make sure that you understand the terms of the agreement. Watch out for additional monthly fees, rates without taxes, and rates that have pass-through charges.
Get Expert Advice
An energy broker can give you insight into multiple suppliers so you can find the best energy offers. Brokers process hundreds, if not thousands, of transactions per year and are experts at deciphering energy contract language, rates, and terms.
Mark Down Your Renewal Date
Energy contract renewals are important to keep track of. If you forget, most suppliers will bill you a variable, market-based rate that will be very high. It’s important to mark down your contract expiration date in your calendar so you remember to shop for a renewal when the time comes.
Check Your Bill
After your new energy contract goes into effect, it’s important to follow up by checking your utility bills. Be sure that the new rate on your bill matches that on your contract, and contact the energy supplier immediately if it does not. If you happen to be using an energy broker, they will do this for you to ensure that you are being billed correctly.
Shopping for Gas
Shopping for gas plans has its own set of considerations. Use these tips to shop smart:
Burner Tip vs. City Gate
When shopping for a natural gas rate, it’s important to know if the quoted rate is for gas delivered to the city gate or the burner tip. The city gate is the regional delivery point located near your business, while the burner tip is your actual facility. Oftentimes, customers choose lower gas rates that are delivered to the city gate, not knowing there will be additional charges to bring the gas into the facility.
Review Historical Usage
Gas usage can vary with seasons, so review your past bills to help estimate costs. Since gas suppliers take on the risk of the market, the more consistent your natural gas usage, the better your rate. If you only use natural gas for heating in the winter months, you could benefit from the utility default rate rather than choosing a supplier.
Hedging vs. NYMEX
Gas plans with hedging can give you stability against market volatility so you can budget your energy costs. These are presented as fixed-rate plans and often are priced higher due to their limited-risk profile. Choosing a NYMEX-based plan, on the other hand, allows you to purchase natural gas each month based on the current spot market prices. This can be quite beneficial when natural gas prices are low and stable.
Consider Contract Lengths
Longer contracts often give you lower rates but can have early termination fees. It’s important to consider energy price trends and future outlook when determining the length of your gas contract.
Red Flags
Be aware of these common pitfalls when shopping for energy. Here are the red flags to watch out for:
Complex Fee Structures
Look out for hidden fees like utility congestion charges, line losses, transmission, and capacity pass-through adjustments, and other price components not bundled into your rate.
Long-Term Contracts with No Flexibility
Some suppliers will lock you into long contracts with no flexible terms. Review material change clauses so you don’t get stuck in an unmanageable plan.
Supplier Reputation
Not all energy suppliers have a good track record. Make sure your supplier is reputable as common problems with energy suppliers can disrupt service and cost you extra.
Watch Out For Scams
Unfortunately, there are many energy scams in the marketplace. Before you sign the contract, be sure that you are not falling for a typical energy fraud. Here are some of the common scams to be aware of:
- Short-term low rates that end up tripling a few months after you sign
- Hidden utility bill charges and pass-through costs on plans that appear to be fixed
- Auto-renewal contract language that does not let you cancel
Final Thoughts
Shopping for energy plans requires knowledge of the market, current trends, and options. Follow these steps and watch out for the red flags, and you can find the right energy plan for you, whether for a household or commercial operation. If you want to simplify the process Diversegy offers energy consulting services to help you get the best energy solutions for your needs. Contact our team to find out how we can help you with finding and managing the right plan.
