Please note that this post is purely for informational purposes. As a company, we absolutely DO NOT encourage breaking your contract with your electricity provider (or any other company, for that matter). A contract is a legally binding agreement and there are certain moral obligations in fulfilling your commitments, as well. That being said, life-altering or life-changing situations may arise in your life forcing you to examine such commitments.
Breaking or cancelling a contract is always an incredibly difficult decision, but sometimes it’s the action that makes the most (financial) sense for you, your home, or your business. Understanding your customer rights and more importantly the contract terms you signed up for originally are key parts in breaking out of or cancelling a contract with an electricity provider.
What are electricity providers?
For those in regulated energy markets around the US who may not be familiar with the terminology commonplace in deregulated markets like Houston, Texas, Columbus, Ohio, etc., electricity providers are companies that sell electricity to consumers. In regulated markets you only have the choice of dealing with the local utility company for all of your electric and gas needs, but in deregulated markets you can choose to shop for rates and plans from your local utility company — or one of the many providers operating in your area.
Electricity Providers vs. Local Utilities
The main benefit to a deregulated market is that there is competition. Instead of having a few utilities that provide all required energy services, electricity providers can sometimes provide better pricing options while handling the supply side of an energy bill. The competitive nature of a deregulated market ensures that electricity providers are persuaded to offer the best rates, products and services. This also means that electricity providers need to stay competitive in order to retain their customers.
If a residential or commercial customer is unhappy with their current contract, they have an option to move to another company — unlike in an energy market that is regulated where the customer is stuck with the 100-year old local utility.
Rights of Energy Consumers
The first thing you should know as an energy consumer is that you have rights. These rights apply whether you select an electricity provider or decide to continue receiving your supply from your utility. Every state has a Public Utility Commission or related organization. The Public Utility Commission’s primary job is to help protect your rights as a consumer of energy.
These rights include:
“Your Rights as a Customer” Disclosure – electricity providers must provide a standard list of customer protections (reflects Public Service Commission mandates).
Language of Material – electricity providers must provide information in all languages of their customers.
Terms of Service Agreement – electricity providers must provide this document. It is the customer’s contract, which explains the terms and conditions of receiving electricity supply from the company.
Electricity Facts Label – electricity providers must make contact terms and pricing information available to allow customers to compare different offers.
Dispute Resolution – a customer can make complaints about an electricity provider. Complaints are heard by the Public Utility Commission of the state. Any complaints must be handled and investigated by the electricity provider.
Non-Discrimination – electricity providers are not allowed to deny service to any customer based on income or location.
Making Changes to your Account – electricity providers cannot switch customer service or add charges for optional services to a bill without the customer’s permission.
Privacy of Information – customer information must be kept private at all times. Electricity providers must not share any information with any other company without the customer’s permission.
Keep in mind that every state has its own laws and regulations concerning electricity. For more information or to file a complaint, you can always contact your state’s Public Utility Commission.
Cancelling a Contract
Your rights concerning cancelling a contract typically fall under the following:
Notice of Contract Expiration – when a customer has electricity services for a contract that has 3 or more months left, the electricity provider must notify them (in writing) at least 30 days (or one billing cycle) from the end of the contract. The electricity provider should not send any notifications (regarding contract expiration) to customers more than 60 days or two billing cycles from the end of the contract.
As a customer, when you receive this notification, you have two options.
- Select a new electricity provider: at this time, you can select a new provider before the expiration date on your contract. Selecting a new provider ensures that your services are automatically switched without any disruption in service.
- Renew your current service: at this time you can renew your service with the provider.
It is important to note that when it comes to cancelling your contract with your current electricity provider, failing to select a new provider may result in your account automatically switching to a different plan with your current provider. This new plan (typically month to month or variable) might not have the best rates.
Not all contracts are the same! Knowing when your contract expires, or the end date of your contract is the best and easiest way to cancel. However, in some situations, a customer might want to leave their electricity provider sooner rather than later.
Breaking a Contract
Breaking a contract before the expiry date is a trickier feat. The reason for this is outlined in the contract’s terms and most of them will indicate what you can and cannot do once the contract is signed. This is why it is so important to read your contract carefully and understand exactly what you are signing for.
Many electricity providers will allow a customer to break a contract provided they pay a fee. This fee might be a flat rate of $100 (for example). The fee could also be an amount calculated based on how many billing cycles or months are left on the contract.
If you have major concerns about your current electricity provider contract, feel free to reach out to us at ElectricChoice.com or contact your state’s Public Utility Commission.
Typical Reasons for Leaving a Provider
There are three main reasons why customers choose to cancel or break a contract.
Bad Customer Service: there’s nothing that irritates a customer more than receiving poor customer service when they are trying to resolve a complaint or problem. Electricity is a critical component to how customers get through their day. If there is a mix up on their bill, interruption in service, or even a general question, customers want to have the issue resolved within a short period of time.
Bad Rates: the amount or rates a customer pays for their services is a big reason why they want to switch electricity providers. Finding a different service provider that offers cheaper rates, plans or contracts means that the customer doesn’t have to pay as much in the long run. This is very appealing to cost conscious consumers.
Bad Product Offerings: when a customer signs up with an electricity provider, they purchase and pay for a specific service(s). Over time, the electricity provider might not offer the products that the customer is looking for, or the product might be inferior compared to one offered by a different service provider. Having the latest and greatest in terms of technology and the cost of that technology is a key element in customer retention.
The reason why you might want to leave your current electricity provider might be different from the typical or usual reasons listed above. That’s okay! Wanting to change electricity providers is a common occurrence – as long as you understand your contract terms and who to contact when problems arise.