energy-meterI’m all about saving the planet. Yet recently I did that-thing-I-said-I'd-never-do-again: I switched my electricity plan back to regular (non-wind) energy. Why? Because it was sooooo expensive! I just got tired of paying a third more in energy costs to do my part. I don't know if every energy company charges as much for "green" energy as the one I’m currently under contract with, but next time around, I plan to research the heck out of this.

Here are some other tips I've recently learned about that will help me save when my contract is up for renewal again. If you feel like you are paying too much for electricity, I hope these tips can help you too!

1. Look for "kWh minimums" in your contract

My current energy provider charges a certain fixed price if my kWh (kilowatt hour) usage falls below a certain amount each month. If you have a kWh minimum in your contract, then using less energy (such as setting the A/C thermostat a few degrees higher) may not save you anything at all.

  • Example: This verbiage is in small print at the bottom of my contract: "A monthly Base Charge of $9.95 applies when usage is below 1000 kWh in a billing period." So even if I go out of town or don't run my A/C or heat one month, I’ll still pay at least $9.95.

2. Find out if your plan is a "fixed" or "variable" rate

There’s no one "sure" savings tip in terms of choosing a fixed or variable energy rate. What’s important to know here is that a fixed rate plan is a better budgeting tool, because you can estimate your total cost of energy for the year much more closely. However, the gambler in you may rebel at locking in a fixed rate—what if energy rates decline and you end up paying more?

  • Savings tip: Look at energy cost trends for the last few years. Do they seem to be on the decline or are they continuing to rise? This will be your best indicator of whether to gamble or play it safe—this is a very personal decision that depends on budgetary wiggle room, trends, and your tolerance for risk.
  • Research energy trends: This helpful website can give you a quick overview of current short-term energy trends as you get closer to your contract end date and need to choose between variable versus fixed costs.

3. Know that even if you choose a "fixed" price plan, your price can still change mid-contract

This is because your energy provider isn’t charging you what they pay per kWh. What you’ll pay includes a delivery charge and any state administrative fees and taxes they’re required by law to assess.

  • Example: Before admin fees and taxes, my plan's base kWh rate is 0.087. But add on the "delivery fee" of 0.042, and my per-kWh rate is now 0.129. If the fees go up, my rate goes up accordingly.
  • Budgeting tip: No matter how carefully you budget for energy, you can't control taxation or energy law. In other words, if my delivery fee increases to 0.045, my rate will rise to 0.132 per-kWh, even though my base per-kWh rate of 0.087 did not change.

4. Don't allow perks to trump prices

I’ve been known to allow myself to get reeled in by the promise of free airline miles. And gift cards. And cash back rebates. And pretty much anything else "free." But this hasn't always worked out in my favor cost-wise. For the biggest savings, focus on kWh prices, period. If you save enough, you can buy that extra thing the other company was dangling in front of you as a sign-up incentive!

  • Savings tip: Calculate out how much you could earn in perks versus cost savings. For example, let's say your perk (like mine) is earning free airline miles over the course of a year. Say your total annual spending is similar to mine at $1,320 per year. I get two airline miles for each dollar I spend on energy. So at most I will earn 2,640 airline miles through my energy incentive in the next 12 months. At that rate it will take me 12 years to earn up enough for a domestic coach class ticket—not quite the "perk" it seems!

5. Know your early termination fees

Most electricity plans run on a 12-month cycle. Termination fees tend to range between $150 – $300. Here, don't get confused (as I once did) by large print ads saying "No fees to switch to such-and-so energy company." No energy company in their right mind would charge you to sign up with their service in this age of deregulation. The fees come when you try to leave.

  • Savings tip: Rather than risk a fee for leaving at the wrong time, know your contract end date and switch as close to (but before) the actual end date as possible. This helps you save in overlap fees and avoid termination fees altogether.

6. Research any "special" or "introductory" offers

Often energy companies are willing to offer introductory deals to brand new customers. Common deals I've seen include "free nights," "free weekends," and "first three months half-off." But what happens during the weekdays, during the days, and after those first three months? Be sure you know before you sign…especially if a cancellation fee also applies!

  • Savings tip: There’s a reason energy companies offer "free energy" during certain time periods or after a certain period of time. Think like an energy company that wants to make a profit and find out what that reason is. Look at your energy bill—do you use a lot of energy during the "free" times? How much will you really save? Recently one energy company in my area started advertising "no free this or free that—just low prices all the time." To figure out if an introductory offer is worth it, calculate out both scenarios by provider—low price all the time versus lower prices at certain times.