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Understanding electricity contracts

If a marketer offers you an electric contract, it's important to fully understand the offer and any terms and conditions of the contract. Below are a few questions we suggest you ask. This is not intended to be an exhaustive list of questions, as every contract will be different.

Watch: Protect your electric account

Ask about the contract

Questions to ask

If, and when, you sign up with a competitive electric supplier, you are signing a contract. Ask about the length of the contract. Contracts often last anywhere between six months and three years.

Ask whether the contract has a fixed or variable electric rate. Variable rates change over time, while fixed rates do not. 

Competitive electric suppliers may initially offer you an attractive promotional rate. However, these rates can increase substantially after the introductory period. Ask how long the promotional rate will last and how it will change afterward.

With some contracts, electric rates can change with market conditions or the supplier’s discretion. Be cautious about this type of vague language.

As with most contracts, there will often be early cancellation or termination fees. Be sure you know if there are fees before signing any contract.

Sometimes contracts will automatically renew. Ask if and when this would happen. You can always call your existing supplier and ask when your current contract expires.

Renewable electricity can come in different forms and from different places. Ask about the renewable electricity provided through the contract.

A lot of renewable energy comes from wind projects in states such as Texas. This energy is commonly referred to as "National Wind" or “National RECs.” Read the contract's fine print if you only want to support certain renewable sources.

Always be sure to receive a contract in your native language and read the fine print. In the past, customers of some competitive electric suppliers have complained about poor customer service. Be sure you have adequate contact information if any questions arise.

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