Shopping for electric pricing can be confusing. How do you know you’re getting a good price? Does this price include everything? Is Gross Receipt Tax (GRT) included in the price?
You, the consumer, should have the answers to these questions before signing your account over to avoid being hit with hidden fees.
- Understanding what is in electric pricing when switching suppliers
- Electric Utility Charges (Electric Distribution Company): These charges will be paid to the utility whether you buy your electricity through the utility or an alternate energy supplier.
- Local Distribution Charges: These are the charges associated with sending the electricity through the wires and into your home, and for the costs of maintaining these wires.
- Customer Service Charges: These may vary by utility.
- Supplier Charges: These are the charges associated with the purchase of the actual electricity and getting it to your local utility.
- Commodity Charge: This is the cost of the actual electricity.
- Ancillary, Capacity, and Transmission Charges: These are costs charged by the electric distribution system in relation to transporting the electricity from its generation point to the local utility system.
- Line Loss: This covers the cost of energy being burned off during transmission.
- Supplier Administration Charges: These are charges to cover back-office expenses.
- Electric Utility Charges (Electric Distribution Company): These charges will be paid to the utility whether you buy your electricity through the utility or an alternate energy supplier.
This may seem to be a lot to take on, but all you need to worry about is this: When you receive a fixed price, is it truly a fixed price?
Make sure that fixed price includes energy, capacity, and transmission, and all other charges listed above. If you’re comparing the costs of two different suppliers, make sure that you’re comparing apples to apples. If one price is lower but does not include all of the components of the cost, it may not be a better price.
Some locations and states have GRT, and suppliers can price with or without. If you’re unsure, ask for a copy of the contract to see what’s included and the terms of the contract. Again, if one price includes this tax and the other doesn’t, you can’t really compare, and you may be surprised later when your bills show up with added charges.
Ask for the utility’s Price to Compare (PTC) or look it up on your utility’s website. The PTC is a calculated rate by your local utility to show what “all-inclusive” price you would be paying if you purchased your electricity through the utility instead of an alternate supplier. Keep in mind, however, that the PTC can change, on average, every three months, depending on the utility.
When you lock in a rate with an alternate supplier, you are setting that price for the length of your agreement, so you’re taking away the uncertainty and risk associated with utility pricing.
Too Good to Be True?
You’ve heard the saying “too good to be true.” If an electric price seems really low compared to others, it is okay to step back and reevaluate the situation. Make sure that all of the pricing components are included in that number.
Many feel the pressure to sign now! You can always ask for copies of the contract, call other suppliers, and call your utility to make some comparisons. Sometimes the definition of “fixed price” can be different between suppliers. One supplier may only be “fixing” certain components.
Customized Pricing
UGI EnergyLink offers businesses a customized pricing option. We will look at your past electricity usage, evaluate the energy market, and offer you one or more options to lock in your pricing. And, if our pricing isn’t great for your business, we will advise you to stay with the utility and try again at a later date!
Fixed vs. Variable
When shopping with an alternate supplier, you can choose a fixed price or a variable “indexed” price. With a variable rate, prices are just that—variable. For most homeowners and small businesses, this option is just too risky, and they usually opt for a fixed price.
Typically, peak months for electric are in the hot summer months of July and August because these months are high-demand months for electricity—think of all those air conditioning units running in the summer. If you have a variable rate, expect to see price increases in the summer months.
That’s not to say that electricity prices can’t increase in other months as well. In 2014, the Polar Vortex hit the Northeastern U.S. in January and February. This made both natural gas and electricity prices skyrocket. Demand was just too high, and energy producers were scrambling to keep up with it. This was a very scary time for customers who had not locked in their electricity rates.
How to Avoid High Electric Costs
There are many saving tips that you can research, and we’ve compiled several in our Home Owner’s Energy Guide and our Business Owners Energy Guides. But, the greatest help you can give yourself is to make sure that your price is protected throughout the year. Communicate with your sales representative or customer care specialist about your concerns. A fixed price option can take the risk out of a fluctuating market. Utilities normally change their price monthly or quarterly. Take control of your energy today by locking in a good price.
Feel free to contact us here at UGI EnergyLink with any questions you have at 1-800-427-8545, or Request a Quote.