Choosing an Alternative Energy Provider

Depending on where you live, you may have the option to choose an alternative energy provider.  Where I live in Ohio, Columbia Gas and AEP Ohio are my local natural gas and electric utilities.  In essence, they provide the wires and pipes in my city and neighborhood that distribute the energy (natural gas, and electric) to me.

However, when it comes down to where the actual energy is purchased from, I can choose another provider.  I don't pretend to know a lot of the details, I just know that it boils (ha ha) down to this:  Energy companies can offer you different rates for energy.

For instance, I use a company called FirstEnergy Solutions for my electric.  They offered a locked rate of 6.9 cents per kilowatt hour, fixed rate, through December 2019. At the time, energy from AEP was, I believe, 7.6 cents per kwh.  Nothing says your regular electric utilities' rate can't go down, but have you ever seen it go down?  About a year or so since I signed up, AEP charges 9 cents per kwh.  We use ~5,200kwh of electricity per year, which means at the current rates we save around $110 a year, or a little over $9 per month.  As AEP's rate (presumably) continues to go up over the next 6 years, I'll continue to pay 6.9 cents per kwh.  For my November 2013 bill, if I hadn't switched, it would have been $60.24.  Because I did, it was $52.92.  Not a massive difference, but every little bit helps!

However, you have to be careful, and read the fine print.  Different doesn't always mean less.  A few weeks ago, we had guys going door to door through the neighborhood, trying to sign people up for a different natural gas provider.  He showed me a copy of a gas bill, and pointed to the graph on the bill as an example of how natural gas prices spike in the winter.  Problem was, that's not a graph of price, that's a graph of usage.  If you have natural gas heating, of course you use more in the winter!  He didn't have a brochure that laid everything out, but he let me see the contract.  55 cents per ccf, 1 year commitment, and a $250 early termination fee.  But I'd get a $25 Visa gift card for signing up!  Ooo!  Ooo!  However, I had just received our natural gas bill a few days before, and remembered looking and seeing that, even through Columbia Gas (because I haven't switched natural gas energy providers yet), the rate is only 46 cents per ccf.  Needless to say, I declined the offer.

Keep in mind that both utilities still bill me for getting the electricity and gas to my house.  The actual cost of energy is just one portion of the bill.  And it's important, and convenient, to note that I don't receive a separate bill from FirstEnergy.  They bill AEP, and AEP bills me.  No extra checks to write, no difference in how I've been paying my bill.

So, as always, do your research.  Read the fine print.  Compare the rates.  Beware of cancellation fees.  Not every offer or company out there is trying to save you money.