How to Compare Electricity Plans — Beyond the Advertised Rate

How to Compare Electricity Plans

• Use the Electricity Facts Label (EFL) as your starting point. In deregulated states, every residential plan comes with an EFL — a standardized one-page disclosure showing the per-kWh price at 500, 1000, and 2000 kWh/month, contract length, renewable mix, and early termination fee. The EFL is the only document where every plan reports the same numbers in the same format, and it's the only reliable comparison tool.
• Fixed vs variable rate — choose based on your tolerance for risk. Fixed-rate plans lock in your $/kWh for the contract term (often 6–24 months), insulating you from price spikes but typically costing 1–3¢/kWh more than the variable market. Variable-rate plans track wholesale prices, which can be cheaper for years at a time but spike during cold snaps, heat waves, or grid emergencies. Pick fixed if you value predictability; pick variable if you can stomach monthly variability for long-term savings.
• Look past the headline rate to the monthly base fee. Many cheap-rate plans add a $9–$15 monthly customer charge that, over a year, adds $108–$180 to your bill — wiping out savings from a slightly lower per-kWh price. Compare plans on full annual cost using your actual kWh usage, not the teaser rate alone.
• Contract length matters more than most people realize. A 12-month fixed-rate plan locks you in during a falling market. A 24-month plan locks you in longer. Variable-month-to-month plans offer flexibility but expose you to any price spike during the year. If you expect to move within a year, weigh early termination fees ($10–$20 per remaining month is typical) against the savings of going long.
• Watch for tiered pricing, demand charges, and green premiums. Some plans charge a low rate for the first 500 kWh, then a much higher rate beyond — punishing high-usage households. Time-of-use plans shift cost by time of day. Green-energy plans add a small per-kWh premium (often 1–2¢/kWh) for renewable content. None of these are bad, but they're all things to model against your usage pattern.

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