Mistake 1: Focusing only on the headline rate
The rate per kWh is the number suppliers lead with, and it's important. But it's not the whole picture. Several factors can make a plan more expensive than the headline rate suggests.
Monthly fees
Some plans charge a flat monthly fee — $5, $10, $15 — in addition to the per-kWh rate. On typical residential usage of 850-1,000 kWh/month, a $10 monthly fee is equivalent to adding 1-1.2 cents to your effective rate per kWh. A plan at 9 cents + $10/month costs the same as a plan at 10 cents with no fee.
Usage tiers
Tiered pricing charges different rates at different usage levels. You might pay 8 cents for the first 500 kWh and 12 cents for everything above. Your average rate depends on your actual usage. If you use 1,000 kWh/month, your effective rate in this example is 10 cents, not 8 cents.
Seasonal variation
Some plans have different rates for summer vs. winter. The rate they advertise might be the favorable season, with higher rates during the other half of the year.
Always calculate your expected total monthly cost, not just the headline rate. Read the Plan Information Document for the complete pricing structure.
Mistake 2: Falling for teaser rates
A teaser rate is an introductory price that expires after a short period, often 1-3 months. The marketing shows the low rate; the eventual higher rate is buried in the terms.
How teasers work
A supplier might advertise 6.9 cents/kWh. The disclosure reveals: 6.9 cents for months 1-3, then 11.5 cents for months 4-12. If you only look at the headline, you think you're getting a great deal. In reality, you're paying above-market rates for 75% of your contract.
How to spot teasers
Look for language like “introductory rate,” “promotional period,” or “initial rate.” Check whether the Plan Information Document shows multiple rate tiers by time period. If the rate structure is complex, calculate your total cost over the full contract term.
When teasers might be okay
If you're aware of the teaser and the plan has no early termination fee, you could take the low rate for three months and switch before it increases. This requires active management and a willingness to shop again. Most people forget and end up paying the higher rate.
➤Compare transparent rates in your areaMistake 3: Ignoring the contract term and ETF
The contract term determines how long you're committed. The early termination fee determines what it costs to leave early. Together, they define your flexibility.
Long terms lock you in
A 24-month contract might offer a good rate, but a lot can change in two years. You might move. Better rates might appear. Your utility's Price to Compare might drop. If you're locked in with a $200 ETF, those options become expensive.
No ETF means flexibility
Month-to-month plans and some fixed-rate plans have no early termination fee. You can switch anytime without penalty. The rate might be slightly higher than long-term contracts, but you're never trapped.
Match term to your situation
If you're renting month-to-month or might move soon, long contracts with ETFs are risky. If you've owned your home for years and plan to stay, locking in a good rate for 24 months might make sense. See our early termination fees guide for more on this trade-off.
Mistake 4: Not reading renewal terms
When your contract term ends, what happens? This is where many consumers get surprised.
Auto-renewal at variable rate
A common pattern: your 12-month fixed rate expires, and you automatically roll into a variable-rate plan. The supplier sends a notice (which you might miss), and suddenly your rate is 40% higher. The variable rate is disclosed in your contract — you just didn't read that part.
Month-to-month continuation
Some plans convert to month-to-month at the same rate. This is consumer- friendly but not universal.
Return to utility default
Some contracts simply end, returning you to your utility's default service. This isn't necessarily bad — the utility's Price to Compare might be competitive — but you should know it's happening.
The solution: calendar reminders
When you sign up for any electricity plan, set a reminder for 30-45 days before the term ends. This gives you time to shop for a new plan and switch before unfavorable renewal terms kick in. Don't rely on supplier notices.
Mistake 5: Comparing apples to oranges
Not all rates measure the same thing. Misunderstanding what you're comparing leads to wrong conclusions.
Supply rate vs. total rate
The rate from a competitive supplier covers generation (supply) only. You still pay delivery charges to your utility. When comparing suppliers, compare supply rates to supply rates. Don't compare a supplier's supply rate to your total bill divided by kWh — that includes delivery, which doesn't change when you switch suppliers.
Price to Compare is your benchmark
Your utility's Price to Compare (PTC) is the supply rate for default service. Any supplier rate below the PTC saves money on supply costs. Rates above the PTC cost more. The PTC is the correct comparison point.
Fixed vs. variable
A variable rate might be lower than a fixed rate today but could increase next month. A fixed rate gives you cost certainty. Comparing a variable rate's current value to a fixed rate misses the difference in risk. See our fixed vs. variable guide for more on this trade-off.
➤Compare rates against your utility's PTCMistake 6: Switching without checking your current contract
Before signing up with a new supplier, check what you're currently under.
Are you under contract?
If you're on a fixed-term plan with an ETF, switching before the term ends costs money. Calculate whether the savings from switching outweigh the ETF. Sometimes waiting a few months for your contract to expire is the better financial choice.
When does your term end?
Know the end date. If your contract ends in two weeks, you can switch without penalty. If it ends in six months, you need to factor in the ETF or wait.
What are your current terms?
Sometimes people switch from a plan that was actually fine. If you're on a competitive fixed rate with months remaining, a new plan offering a slightly better rate might not be worth the hassle or ETF. Understand what you have before jumping to something new.
Mistake 7: Not reading the Plan Information Document
This is the meta-mistake that enables most others. The Plan Information Document contains all the information you need to avoid the other six mistakes. Skipping it is how people get surprised.
Three minutes prevents months of regret
Reading a PID takes about three minutes. In that time, you'll see:
- The complete rate structure, including any tiers or teasers
- Monthly fees beyond the per-kWh rate
- Contract length
- Early termination fee
- Renewal terms
- Cancellation process
If any of these terms surprise you, you shouldn't sign up. If they all make sense, you can enroll with confidence.
Marketing vs. disclosure
Marketing highlights the attractive features. The PID discloses everything. When they conflict, the PID governs. A supplier might market “Rates as low as 6.9¢!” The PID shows that rate is a three-month teaser. The PID is the truth.
For a detailed walkthrough of PID sections, see our Plan Information Document guide.
Pre-switch checklist
Before enrolling with any supplier, confirm:
- You've read the Plan Information Document. Not skimmed — actually read the rate, term, ETF, and renewal sections.
- You know your current contract status.Are you under contract? What's your ETF if any?
- You've compared to your utility's PTC. Is this rate actually better than default service?
- You've calculated total cost. Including monthly fees and any teaser expirations.
- You've set a calendar reminder. For 30-45 days before your new contract ends.
- The term matches your flexibility needs.Long term with ETF only if you're stable; shorter term or no ETF if you might move.
If you can check all six boxes, switch with confidence. If any give you pause, research more or choose a different plan.
Frequently asked questions
What's the biggest mistake people make when switching?
Not reading the Plan Information Document. Three minutes reviewing the PID catches most of the other mistakes — teaser rates, hidden fees, long terms with high ETFs, unfavorable renewal terms. The PID contains everything you need to make an informed decision. Skipping it is how people end up surprised by their bills.
How do I know if a rate is actually good?
Compare it to your utility's Price to Compare (PTC). The PTC is what you'd pay on default service for the generation portion of your bill. Any rate below the PTC saves money compared to not switching. Also check whether the rate is fixed or variable, whether there are monthly fees, and how long the rate lasts. A rate 1 cent below the PTC with a $15 monthly fee might not save anything.
Is the cheapest plan always the best choice?
Not necessarily. The cheapest rate might come with a 24-month term and $200 early termination fee. If you might move in a year, a slightly higher rate with no ETF could cost less overall. The cheapest rate might also be a teaser that expires after three months. Evaluate total expected cost over the contract term, not just the headline rate.
What should I do if I realize I made a mistake after signing up?
Most states have a rescission period (typically 3-7 days) after enrollment during which you can cancel without penalty. If you're within that window, cancel immediately and choose a different plan. If you're past the rescission period, calculate whether paying the early termination fee to switch makes financial sense, or whether it's cheaper to wait out the contract term.
Do I need to notify my old supplier when I switch?
No. When you enroll with a new supplier, they handle the switch through your utility. Your old supplier is notified automatically. You don't need to call them to cancel — in fact, calling might confuse things or trigger retention offers that complicate the process. Just enroll with the new supplier and let the standard process work.
