Why Energy
Contracts Are Key

Helping Consumers Understand Energy Contracts

Why Pay More for Energy Supply?

For the average business and individual consumer, a secure low-priced, fixed rate, all in electric power supply contract is probably the most sensible. Typically “all in” includes the cost of the energy plus Capacity and Transmission fees and ancillary charges (*), If a quote seems too good, verify what is on offer. A fixed price, “all in” supply contract should include all charges for electric power except for taxes and the fees your local utility charges to deliver the power to your account. Make sure you are not comparing an “energy only contract” or a contract that passes through the other charges with a fully fixed all in contract.

Most residential supply contracts allow early termination without penalty only if you move. Virtually all contracts for businesses contain early termination clauses. Make sure you understand what will occur at the end of your contract term. Most, but not all contracts have automatic rollover provisions; some are reasonable, others are not. In most cases, you will be better off looking to extend or replace a supply contract several months prior to its actual expiration. If you contract though UtilityDiscount.com, we will do our best to alert and remind you to take action prior to contract expiration.

For most accounts a fixed rate contract is sensible. However, given an accounts usage profile and a business risk appetite and desire to minimize energy costs, a fixed percentage or a block and index product might be appropriate. Depending on the price and anticipated market conditions, collar or bandwidth products can be very cost effective.

With a fair termed fixed price contract, there will not be a budget busting surprise, providing the terms of the contract are understood. Each provider has its own form contracts. Some are better than others, but all have adverse terms that can dramatically affect the actual contract price. These terms can make an apples to apples comparison of suppliers bids rather challenging. What costs are truly fixed in suppliers All In products will vary. Payment terms differ, as do penalty clauses contained in supply contracts. The price of energy is just the starting point. The contract terms must be understood to properly evaluate the best offer. If your electric bill is a sizable portion of your budget, or you simply prefer the advantages of having an expert consultant, please consider Utility Discount’s Concierge Service.

* The United States Federal Energy Regulatory Commission (FERC) defines the ancillary services as: “those services necessary to support the transmission of electric power from seller to purchaser given the obligations of control areas and transmitting utilities within those control areas to maintain reliable operations of the interconnected transmission system.”

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