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Different Types of Electric Plans and How They Fit Your Needs

December 4, 2020
by dmirza
lightbulb on electric plans bill

A student living alone in a small apartment and a family of six residing in a large house may not spend the same amount of power in a month; they require different electric plans.

Just as their energy requirements differ, so should your electric plans.

Light companies offer several types of plans designed for various levels of energy usage. Some electric companies may require an initial deposit, and some allow you to pay your energy bill in advance. Others may not even need a credit check.

Pick the Right Type of Electric Plans for Your Needs

You can avoid unpleasant bill surprises by understanding your electric plan correctly.

Here are various types of electric plans in the market:

Month-to-Month Plans

Month-to-month plans are no-contract plans that usually offer variable pricing. Many retail electric companies (REPs) offer cheap introductory rates to attract new customers. Since these plans carry no long-term commitment, you can switch providers every month and take advantage of these inexpensive rates.

However, electricity rates change every month, according to market prices. If you don’t monitor your usage and cancel the plan when energy rates spike, you will receive higher bills.

No Cancellation Fee Plans

Some providers offer electric plans without a cancellation fee; meaning, you are free to cancel or switch without incurring a penalty. Check if they come with higher energy rates to compensate for the early termination fee. Also, remember to go through the fine print to ensure there are no hidden costs or gimmicks.

Prepaid Electricity Plans

Light companies that provide prepaid plans do not need you to pay a security deposit, but you should have a minimum balance in your account to start the service. This amount is nonrefundable, which means you are paying the bill before using the power.

You can choose a fixed-rate plan and lock-in the energy prices for up to three years. Pay as you go plans or prepaid plans allow you to monitor your energy usage and lower your spending.

Cash Reward Plans

Refer-a-friend plan, bill credits, cash backs, and other dollar rewards are the standard for some light companies. These plans bring in more business or help retain existing customers since cash rewards are expected for plans with 24 or 36-months.

Free Nights and Weekends Plans

Also known as time-of-use electric plans, these electricity plans offer free power during certain times, such and nights, evenings, or weekends. Electric companies target a small group of customers with free electricity in the agreed periods, but rates may be inflated for the rest of the time.

Tiered Rate Energy Plans

Electricity rates are usually designed for usage levels of 500 kWh, 1000 kWh, and 2000 kWh. However, with narrow-range tired rate plans, the fine print may be too confusing. Some electric providers offer plans with a small range, say 200 kWh, and the rates may be very high over or below that.

For instance, at 1000 kWh usage, the rate may be 7.4 ¢, but if you dip below that level or exceed 200 kWh, it may shoot up to 15 ¢. So, make sure to review the Electricity Facts Label of each plan to understand the terms.

Finding legitimate electric plans with affordable pricing is now a simple process. Enter your Zip code here and find plans based on your energy spending. Compare the rates of different plans and enroll for a plan that fits your home’s needs.

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