Three Tips on How to Read an Energy Contract

The energy shopping website Electric Choice posted a blog entry with tips about “How to Read a Residential Electricity Contract.” While these tips are targeted to residential customers, the same general guidelines apply to business and institutional customers as well. The site recommends reviewing three resources:

  • Energy Facts Label – The Public Utility Commission of Texas published a brochure with extensive information about energy facts labels. The exact information provided will vary by states, but basically they are designed to be much like food labels, providing information on price, contract term, cancellation penalty, sources of generation, and emissions of greenhouse gases and particulate. Looking at the facts label is often the first step in making apples to apples comparisons among different energy plans.
  • Terms of Service – According to the shopping website Power to Choose, the terms of service outline the details of the legal terms and conditions that apply to the contract between the provider and supplier—including associated fees and length of service. It is vital to understand these terms, especially for larger-scale energy buyers taking on higher levels of risk. Electric Choice also notes that in many states retail providers must give customers at least a 30-day notice before the contract expires so the customer has the opportunity to explore other plans before any new pricing takes effect.
  • Your Rights as a ConsumerPAPowerSwitch explains the legal rights and protections available to retail energy customers. For example, companies cannot commit deceptive or anti-competitive activities or switch customers to other providers without their consent. Many of these might seem obvious, but it is important for customers to know that if they switch from their utility service providers they will still be protected by law.
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