What Are Pennsylvania Electricity Plan Terms of Service?

While all Pennsylvania electricity generation suppliers must play by the same rules spelled out in PA law, not all suppliers have the same rules in their plan contracts.

...and there in lies the problem because some customers expect them to.

Always Read the Terms of Service

The Terms of Service are contract terms between you and the retail supplier. They explain things like additional fees, deposits, or other miscellaneous charges. These can include charges for paying by phone or text; discounts for automatic payments, etc. They also spell out the important rate information in your plan:

  • A. Fixed vs. Variable rates -- Fixed rates stay at one price for the duration of the contract. You avoid increased prices but lose out if they fall. Variable rates, however, can change every month depending wholesale prices, seasonal weather, demand, and fuel supply to run generators. Sometimes they're cheap, sometimes painful.
  • B. Introductory rates -- Some plans offer special introductory rates. The point is that "introductory" rates are temporary and after a certain period, the rate will increase. For example, a variable rate plan may have a crazy low introductory price of 2 cents per kWh. Many customers might see that and sign up without another thought. Woe to them for ignoring the warning on the Terms of Service that said the introductory rate applies only to the first month/billing cycle.
  • C. New Customers Only plan -- Some generation suppliers might offer a special rate only to new customers. A "new" customer can be defined as one that has never signed for their service before or (in some cases) has not had service with them in three years. It's up to the supplier to define so read their terms of service carefully.
  • D. Variable rate price limits per month. -- Some suppliers offer variable rate plans that limit how high or how low the price can vary from month to month by setting a percentage. The idea is to cushion the effects of sudden price spikes on their customers or reduce the impact on the company if rates fall too quickly. But, there may be cut-offs for usage amounts or other limiting factors involved that could affect your monthly bill!
  • E. How green are green energy plans? -- Many electricity generation suppliers offer plans with green or renewably-sourced electricity. The problem is that green electrons aren't flowing directly from a renewable energy source. That's because once the electricity from a solar or wind farm enters the PA power grid, it mingles with all the electricity coming from fossil fuel plants. In order to compensate, Pennsylvania retailers purchase Renewable Energy Credits (RECs). The electricity supplier then "retires" the credit when they sell the electricity to their customers. This allows both the the supplier and the customer to claim the equivalent amount of energy reduction as on offset to their conventional energy use. The proceeds of the REC sale go to the renewable energy generator as a subsidy which encourages further green energy development. Residential customers benefit by feeling they have reduced their carbon footprint and helped save the environment.
  • F. Cancellation fees -- Sometimes also called "Switching" fees, many retail suppliers that offer fixed rate plans use cancellation fees as a way to keep customers committed to their contract until it expires. The cancellation fee can be as high as $250. So, customers who choose to leave their current retail supplier need to review their contract terms of service to see if they face having to pay for terminating the contract early.

Shop Smart and Save

You can save yourself a lot of time, aggravation, and money when you read and compare the Term of Service in each plan when you shop for electricity suppliers in PA.

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