Five Things to Know Before You Switch Electricity Suppliers


Nearly half of the states in the U.S. have opted to deregulate their power markets – whether it’s natural gas, electricity, or both – and a large number of consumers switch energy suppliers every day. But with so many variables involved in buying power – from the type of company selling you the energy, to the generation source from which that energy is developed – understanding the basics of switching suppliers can be complex.

Here are five things every consumer should know:

  • The Differences between Electricity Producers, Utilities, and Suppliers

Producers are the companies that generate the power you consume. Utilities are responsible for transporting the power generated by producers over the grid and to the end user. Suppliers are companies that buy and sell power. Consumers can buy power directly from utilities or from a retail energy supplier like Think Energy. In deregulated markets, these companies are able to shop for energy on the open market and sell it at a competitive rate.

  • The Costs That Constitute Your Monthly Electric Bill

The charges included on your monthly bill are broken out into two categories – supply and distribution. The supply portion covers the costs to actually power your home, while the distribution portion covers the costs to get the power from the generation source, over the power lines, and into your home.

Although both categories can fluctuate from month to month, the supply portion typically constitutes the costliest part of your energy bill. Shopping for competitive rates can help significantly lower these costs in deregulated markets. For example, in Pennsylvania, some consumers have saved up to 46 percent on their monthly bills by switching providers.

  • Buying from a Utility Versus from a Supplier

Consumers who choose to buy power directly from their utility often do so through a variable-rate plan that can fluctuate when prices rise and fall in the market. In contrast, buying from a supplier gives consumers the option to select a fixed-rate electricity plan, which allows them to lock in a rate for a set period of time. These plans bring added certainty to monthly bills by removing the risk of price hikes when market conditions change.

  • The “Price to Compare” and Other Important Considerations

The price to compare is established by your local utility and is designed to serve as a benchmark for shopping retail suppliers. If you’re thinking of making a switch, find out your utility’s current price to compare (it changes every few months based on market conditions) and use this rate to determine if you’re getting the best deal from another supplier. You’ll also want to check the terms of your current agreement to make sure you won’t get penalized with fees for switching from your existing provider.

  • What You Need to Make a Switch

If you’ve found a worthwhile opportunity to switch suppliers, all you need is a couple of minutes and a few pieces of information from your monthly bill, including your utility account number. Most suppliers have online enrollment forms that make the entire process seamless – you’ll never know the difference the next time you flip the switch!

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