In states where you can choose your electricity supplier, a low introductory price can be followed by a much higher variable rate. The good news is that the rules and notices built into these markets give you everything you need to shop safely. This post covers two documented Connecticut examples, the contract disclosures and notices that Pennsylvania and Ohio require, and a short plan that keeps you on a fair rate.
What a Connecticut Advisory Said
A January 16, 2014 consumer advisory from Connecticut’s Office of Consumer Counsel and Attorney General warned that some suppliers advertise variable-rate plans with low introductory prices, then raise charges sharply without notice, and that customers whose fixed-rate contracts ended were moved onto much higher variable rates. The Office of Consumer Counsel confirmed that ten suppliers had customers paying above 17 cents per kWh, with some bills reaching 24.9 cents, while standard offer rates from two utilities were about 9 cents. Officials said this could add roughly $100 a month for an average residential customer (Connecticut Attorney General).
The advisory’s guidance is practical: ask how prices are set, how often they change and whether there is a cap. It also says customers “can always switch back to standard service,” that some suppliers charge termination fees of up to $100, and that complaints go to PURA, the state utility regulator (Connecticut Attorney General).
A Settlement
Hartford Business reports that North American Power agreed to pay $2.6 million to nonprofits to settle deceptive marketing allegations, according to the Connecticut attorney general. The company allegedly lured customers with low introductory rates, then switched them to variable rates well above market prices (Hartford Business). A settlement is an agreement and not a court finding, and these examples are from Connecticut.
What the Gap Looks Like in Dollars
Using the advisory’s rates and an assumed 1,000 kWh of monthly use, the gap between a 9-cent standard rate and a 17-cent rate is $80.00 a month, and between 9 cents and 24.9 cents it is $159.00. The advisory’s own estimate was about $100 a month for an average residential customer. The usage is assumed for illustration.
| Rate | Monthly cost at 1,000 kWh |
|---|---|
| 9¢ | $90.00 |
| 17¢ | $170.00 |
| 24.9¢ | $249.00 |
What a Pennsylvania Contract Must Tell You
The Pennsylvania Public Utility Commission’s shopping site says each supplier must give a one-page contract summary when you enroll. It must state the price structure, the generation price in cents per kWh, any introductory rate and how long it lasts, the contract length, and whether early cancellation fees apply. For variable plans it must say what the price is based on, how often it may change, and any ranges or ceilings. It must also state that the supplier’s price may not always save you money and explain your three-day right of rescission (PA Power Switch).
The Notices Before a Contract Ends
| State | Notice timing |
|---|---|
| Pennsylvania | 45–60 days, then 30 days |
| Ohio | 90–60 days, then 45–15 days |
- Pennsylvania: two renewal notices. The first arrives 45 to 60 days before expiration and the second, called the option notice, arrives 30 days before expiration by U.S. mail. If you take no action, the supplier may continue service on different terms, and a fixed rate may become a variable rate, which could be higher. Early cancellation fees do not apply in the last 30 days of a contract (PA Power Switch).
- Ohio: for fixed-introductory-rate contracts that convert to variable rates, suppliers must send a first notice 90 to 60 days before the fixed rate expires and a second 45 to 15 days before. The notices must include the expiring rate and date, the Public Utilities Commission of Ohio website that lists supplier rates, and a note that your bill shows the utility’s price to compare. The second notice must state the initial variable rate. Suppliers must also send an annual notice to customers who are already on a variable rate (Ohio Revised Code § 4928.102).
A Safe-Shopping Plan
- Find your contract end date and put the notice windows on your calendar.
- Read the one-page summary for the price structure, the introductory period and any cancellation fee.
- Ask the advisory’s three questions before you sign: how the price is set, how often it changes and whether there is a cap (Connecticut Attorney General).
- Compare your supplier’s rate with your utility’s standard rate on each bill. Ohio’s notices point you to the utility’s price to compare (Ohio Revised Code § 4928.102).
- Use the last 30 days of a Pennsylvania contract to shop, since early cancellation fees do not apply then (PA Power Switch).
- Know your way back: the Connecticut advisory says you can always switch back to standard service, and the Pennsylvania page describes contacting your utility to request default service (Connecticut Attorney General, PA Power Switch).
My Take on Shopping Safely
- In my view, the advisory’s questions are the most useful checklist: how the price is set, how often it changes, and whether there is a cap.
- In my view, noting your contract’s end date and comparing your per-kWh rate on each bill with your utility’s standard rate is a simple way to catch a rate jump.
- In my view, giving account numbers to unsolicited callers is not worth the risk. That is my judgment, not a sourced rule.
Sources
- Connecticut AG and Office of Consumer Counsel: Consumer advisory (Jan. 16, 2014)
- Hartford Business: Electric supplier pays $2.6M over marketing practices
- Pennsylvania PUC: PA Power Switch, understanding contracts
- Ohio Revised Code § 4928.102
This article offers general information and my own opinions, not financial, tax, or legal advice. The figures in worked examples are assumed. Laws, tax rules, and products change and can differ by location, so check current official sources and talk to a qualified professional about your own situation.