The honest answer: it depends on your situation. For many households in deregulated states, switching suppliers saves real money — often $200-500 per year with 1-2 hours of effort. For others, the potential savings are marginal, or switching isn't possible at all.
Most advice on this topic comes from electricity suppliers (who want you to switch to them) or comparison sites (who earn commissions when you switch). This guide gives you the framework to evaluate whether switching makes sense for your situation — including when it doesn't.
Factor 1: Are you in a deregulated state?
This is the threshold question. If you can't switch suppliers, everything else is moot.
You can switch in these 14 states + D.C.:
- Texas
- Pennsylvania
- Ohio
- New York
- New Jersey
- Maryland
- Massachusetts
- Connecticut
- Illinois
- Michigan
- Maine
- New Hampshire
- Rhode Island
- Washington D.C.
You cannot switch in regulated states (California, Florida, Georgia, and roughly 36 others). Your utility is a regulated monopoly. You can review rate plan options with your utility (time-of-use, tiered, budget billing), but you can't choose a different electricity supplier.
If you're in a regulated state, the rest of this analysis doesn't apply to you — though our guide on why your electric bill is high may help you identify other ways to reduce costs.
For more on how deregulation works, see our state-by-state electricity deregulation overview.
Factor 2: What's your current rate vs. market rate?
The biggest savings come from leaving an overpriced default rate.
If you've never shopped: In most deregulated states, customers who haven't chosen a supplier pay their utility's default rate — called "Price to Compare" in Pennsylvania, "Provider of Last Resort" in other states. These default rates are often higher than competitive supplier rates.
In Pennsylvania, for example, competitive suppliers frequently undercut utility Price to Compare rates by $0.02-0.04/kWh. At 1,000 kWh/month usage, that's $20-40/month in savings — $240-480/year.
If you're already on a competitive rate: If you previously shopped and locked in a good fixed rate, switching may save less. Compare your current per-kWh rate to what's currently available. If the best available rate is only $0.005/kWh lower, you're looking at maybe $5-6/month — worth considering, but not a dramatic change.
The math example:
| Scenario | Current Rate | Best Available | Monthly Savings (900 kWh) | Annual Savings |
|---|---|---|---|---|
| Never shopped (utility default) | $0.14/kWh | $0.10/kWh | $36 | $432 |
| Previously shopped | $0.11/kWh | $0.10/kWh | $9 | $108 |
| Already on competitive rate | $0.10/kWh | $0.095/kWh | $4.50 | $54 |
The first scenario — leaving a utility default rate — produces the biggest payoff. The third scenario barely justifies the effort.
Factor 3: How much do you use?
Savings scale with usage. The same per-kWh rate reduction produces different dollar savings depending on consumption.
Low usage (under 500 kWh/month): Typical for apartments, small households, or mild-climate months. A $0.03/kWh savings produces $15/month — meaningful, but not transformative.
Medium usage (500-1,200 kWh/month): Most U.S. households fall here. A $0.03/kWh savings produces $15-36/month — $180-432/year. Worth an hour or two of shopping.
High usage (over 1,200 kWh/month): Larger homes, electric heating/cooling, EV charging. A $0.03/kWh savings produces $36-60+/month — $432-720/year. Definitely worth shopping carefully.
The multiplication effect: This is why rate shopping is the "biggest lever" for high-usage households. A 10% rate reduction saves more in absolute dollars when you're using more kWh. Efficiency improvements (using less electricity) and rate shopping (paying less per kWh) compound — doing both produces the best results.
Factor 4: Are you willing to do the work?
Switching requires some effort. Here's what's actually involved:
Time investment:
- Finding your current rate: 10-15 minutes (review recent bill)
- Using state shopping tool: 15-20 minutes
- Comparing 3-5 suppliers: 20-30 minutes
- Enrolling with new supplier: 10-15 minutes
- Total: 1-2 hours
Ongoing attention:
- Set a calendar reminder for contract end date
- Monitor first 2-3 bills after switching
- Review rates and shop again at contract end
Your effective hourly rate: If switching saves you $400/year and takes 2 hours, you're effectively earning $200/hour for that time. Even with $200/year in savings, you're at $100/hour effective rate. Most working adults would take that trade.
For guides on the process, see:
- How to switch electric companies — step-by-step process
- What to look for when switching — evaluation criteria
Factor 5: What's your risk tolerance?
Not all suppliers are equal. The lowest rates sometimes come from suppliers with documented issues.
The customer service tradeoff: Suppliers with rock-bottom rates may have:
- Higher complaint volumes
- Slower response to billing disputes
- Aggressive auto-renewal into higher rates
- Sales tactics that generate concerns
Some shoppers prioritize lowest rate regardless; others value responsive service and peace of mind.
Our verdict tier system: We've reviewed 12 major suppliers and assigned verdict tiers based on pricing, transparency, customer service, and regulatory history:
| Tier | Risk level | Examples |
|---|---|---|
| Recommended | Lower risk | Constellation Energy, Direct Energy, Public Power |
| Proceed with Caution | Moderate risk | NRG Home, Spark Energy |
| High Caution Advised | Higher risk | American Power & Gas, Verde Energy |
A "Recommended" supplier may not have the absolute lowest rate, but you're less likely to deal with billing headaches or customer service frustrations. A "High Caution Advised" supplier might offer aggressive rates but comes with documented baggage.
Managing risk: If you're comfortable actively monitoring your bills, disputing errors, and shopping frequently, you can tolerate riskier suppliers. If you want a set-it-and-forget-it experience, prioritize suppliers with clean track records even at slightly higher rates.
When switching is NOT worth it
Be honest about when switching doesn't make sense:
1. You're in a regulated state: You can't switch. Period. Focus on rate plan options with your utility and usage reduction instead.
2. Your savings would be marginal: If the best available rate is only $0.005/kWh below your current rate, you're looking at $5-10/month in savings. For a household that doesn't want to deal with switching friction, this may not justify the effort.
3. Usage is your cost driver, not rate: If your bill is high because you use 1,500+ kWh/month, a rate reduction helps — but usage reduction helps more. Running the AC 8 hours less per week likely saves more than a 10% rate reduction.
If you're investigating high bills, see our guide: Why is my electric bill so high?
4. You're locked in during a low-rate period: If you signed a 24-month fixed contract at an excellent rate and current market rates are higher, stay put. You already won.
5. The tradeoffs aren't acceptable to you: If the lowest rates come from suppliers with significant complaint patterns and you value peace of mind, paying slightly more for a well-reviewed supplier is reasonable. This isn't failure to optimize — it's rational preference for lower friction.
The bottom line: a simple decision framework
Switching is probably worth it if:
- You're in a deregulated state
- You've never shopped or your contract recently expired
- You use 700+ kWh/month
- You're willing to spend 1-2 hours comparing options
- The best available rate is $0.02+/kWh below your current rate
Switching is probably not worth it if:
- You're in a regulated state (can't switch)
- You're already on a competitive fixed rate
- Potential savings are under $100/year
- You recently signed a good contract
The math to run: (Best available rate − your current rate) × your monthly kWh × 12 = annual savings
If that number exceeds $150-200, switching is almost certainly worth your time.
FAQ
How much can I realistically save by switching?
Typical savings range from $100-500/year, depending on your current rate, usage, and the best available market rate. Households leaving a utility default rate for the first time often see the largest savings — $300-500/year is realistic for medium-to-high usage households. Those already on competitive rates may save $50-150/year by shopping again at contract renewal.
Why don't more people switch if it saves money?
Inertia. Many people don't realize they have a choice, don't know what they're currently paying, or assume the effort isn't worth the reward. Others had a negative experience with aggressive sales tactics and avoid the market entirely. In reality, shopping through official state tools (not door-to-door salespeople) is straightforward, and the savings are usually worth 1-2 hours of research.
Is there a downside to switching electric companies?
The main downside is potential customer service friction if you choose a supplier with poor reviews. Some suppliers have elevated complaint patterns for billing disputes, cancellation obstacles, or unclear rate changes. You mitigate this risk by checking supplier reviews before enrolling. The electricity itself is identical — your utility delivers the same power regardless of supplier.
Can I switch every year to keep getting deals?
Yes. There's no limit on how often you can switch in most states. Some savvy shoppers switch annually at contract renewal to capture the best rates. Variable-rate plans can typically be left anytime without penalty; fixed-rate plans may have early termination fees. Set a calendar reminder 60 days before your contract ends to start shopping for your next deal.
What's the worst-case scenario when switching?
The worst case: you sign up with a supplier that has poor billing practices, your rate increases unexpectedly, and resolving the issue takes significant time and frustration. This is avoidable by researching suppliers before enrolling — check BBB complaints, read our supplier reviews, and avoid signing up through door-to-door or kiosk sales. If you do end up with a problematic supplier, you can always switch again or return to your utility's default rate.