Charges For Switching An Energy Supplier

Changing Energy Supplier is one of the simplest ways to save money on your monthly bills. Whether you’re looking for a better rate, improved customer service, or greener energy options, changing suppliers can be a smart move. However, before making the switch, it’s important to understand the potential charges that might apply. 

In this blog, we’ll break down everything you need to know about the charges that could arise when you switch energy suppliers, so you can make informed decisions and avoid any surprises. 

Changing Energy Supplier in a deregulated market may come with certain charges, depending on the terms of your existing contract and the policies of your new supplier. Here are the possible charges you might encounter:

1. Supply Charge

• The cost of the electricity or natural gas you use is usually measured in cents per kilowatt-hour (¢/kWh) for electricity or dollars per therm (or MCF, CCF) for natural gas.
• This charge is paid to the energy supplier, which refers to the energy supplying company you select in a deregulated market.

2. Delivery Charge

• The local utility company will charge you with the fee of transporting electricity or natural gas to your home or business.
• The charge that you pay covers the maintenance of power lines, gas pipelines, and infrastructure.

3. Taxes & Fees 

• Taxes & Fees are charged on both Supply & Delivery and paid to the Government on the bill.
• The total bill includes Supply Charge, Delivery Charge and Taxes. 

Key Differences

Even if you switch suppliers, you still pay delivery charges to your utility company.

Understanding The Types of Supply Plans 

Most energy suppliers offer the below mentioned plans for Supply Charge:

1. Variable-Rated Plans – These plans allow your rate to change from month to month, based on fluctuations in the market.

• Pros: No long-term commitment, potential savings if rates drop.
• Cons: Prices can increase unexpectedly, leading to high bills.

2. Fixed-Rated Plans – Such plans allow you to pay the same rate per unit for the length of the plan, even if market prices fluctuate. This plan normally involves a contract for the length of your choice, ranging from 3 to 36 months.

• Pros: Protection from market fluctuations, stable monthly bills.
• Cons: You might pay higher rates if market prices drop.

Supply Plan details – 

1. Early Termination Fees (ETF)

• If you switch before your current contract ends, your provider may charge you with an early termination fee (ETF).
• The fee structure varies by provider and contract type:

• Flat Fee: A fixed charge (e.g., $50–$200).
• Per Remaining Month Fee: A charge based on remaining contract months (e.g., $10 per month left).

• Some states, like Texas, waive ETFs if you move to a new address outside the provider’s service area.

2. Utility Switching Fees

• In rare cases, local utility companies (which manage distribution) may charge a switching fee when transferring your service to a new provider.

3. Security Deposits

• If your credit score is low, a new supplier may require a security deposit before starting service. Some providers offer no-deposit plans or prepaid energy options.

4. Supply Charge

• This refers to the price that you have to incur per unit of electricity or natural gas.
• Measured in cents per kilowatt-hour (¢/kWh) for electricity and dollars per therm (or CCF, MCF, etc.) for natural gas.

5. MSF (Monthly Service Fee)

• This is a fixed fee that is generally charged by some suppliers regardless of the energy usage.
• Such charges may range from $5 to $15+ per month, depending on the provider.

6. Contract Term

• Check the length of your energy contract (e.g., 6, 12, 24, or 36 months) before signing up the supplier.
• Shorter terms offer flexibility but may have higher rates.
• Longer terms provide price stability but might include higher early termination fees.

 How to Avoid or Reduce Switching Charges

• Check your current contract: Always ensure if your current supplier applies for an ETF before switching to a new supplier. 
• Look for promotions: Some suppliers offer to cover ETFs or provide rebates.
• Consider switching when your contract ends: Many suppliers allow free switching after your contract expires.
• Ask about no-deposit or fee-free plans: Some suppliers waive deposits based on credit history or payment history.

Switching your energy supplier can lead to significant savings, but it’s essential to be aware of the potential charges involved. By carefully reviewing your contract, understanding exit fees, and using comparison tools like Comparison Junction, you can make a smooth transition and find the best energy deal for your needs. 

At Comparison Junction, we make switching energy suppliers easier and more transparent–helping you avoid unnecessary charges and get the best value for your money. Ready to compare? Start now and take control of your energy bills today!