5 Tips for Smarter Shopping for an Alternative Energy Supplier

5 Tips for Smarter Shopping for an Alternative Energy Supplier

January is the most expensive month for home energy bills. Keeping your radiators humming and your showers hot isn’t cheap during the cold winter months. So when a letter from an alternative electricity or gas supplier arrives in your mail, promising “low fixed rates” you might be tempted to take them up on their offer. But is this a sure-fire way to lower your bills or will this deal leave you out in the cold?

What is an Alternative Energy Supplier?

Throughout most the 20th century, utility companies had a “natural monopoly” over the regions that they served. In return for keeping their rates relatively low and making local improvements, they were allowed to be the sole supplier of electricity, gas, and water in their area.

But times have changed. In the past 20 years, deregulation has meant that other companies can now supply people and businesses with energy. The natural monopoly is becoming a thing of the past, and consumers nationwide have seen benefits in the form of lower prices.

Switching to a new alternative energy supplier might sound like an easy way to save money. Out with your expensive local utility company, in with an attractive new supplier who promises cheaper rates. Sounds good, right?

Not so fast.

While there are indeed instances where you can save money by switching your energy supplier, those savings are not a guarantee. And if what this new company promises sounds too good to be true? Then guess what. It probably is.

When considering a switch to an alternative energy supplier, proceed with caution. Otherwise, you could find yourself locked into a long-term contract while paying higher rates than you did previously. There are even alternative energy suppliers that might try and outright scam you.

5 Rules for Shopping for an Alternative Energy Supplier.

We asked Jim Chilsen, spokesman for the Citizens Utility Board (@cubillinois) for some best practices when shopping for an alternative energy supplier. The Citizens Utility Board, also known as the CUB, is a non-profit organization in Illinois that advocates for consumer’s rights.

“At CUB we believe the best way to cut costs is with efficiency,” says Jim. “If people do want to shop for an alternative energy supplier, they should be careful. In the current market, it’s likely that the regulated utility is a better bet over any alternative supplier.”

Jim says, “A lot of people want to have choice in the electric and gas market. But in order for competition to work you’ve got to have informed choice.”

And with all that choice, there are dangerous players trying to swindle consumers. According to Jim, “Hardly a week goes by where we don’t see a complaint that somebody was signed up for a bad gas or electric deal.”

So let’s keep you warm and safe this winter. Here are Jim’s 5 tips for smarter shopping for an alternative energy supplier:

  • Rule No. 1: Find out what the company is charging and how that compares with the utility’s price. Find out if the rate from an alternative supplier is a fixed rate, and for how long, or if it’s a variable rate that changes on a monthly basis. For Illinois residents, the CUB has a free calculator, at  www.CUBPowerCalculator.com that can help you determine if the electric offer you’re considering is a good deal or not.
  • Rule No. 2: Ask if the rate is an introductory rate, how long it lasts, and what the new rate will be. We get a lot of complaints from people who say the low price they signed up for disappeared after a few months and their bill skyrocketed.
  • Rule No. 3: Always ask if there is a monthly fee. We’ve seen fees as high as $9 a month. That’s $100 in costs before you even use any gas or electricity.
  • Rule No. 4: Ask if there is an exit fee if you want to leave a plan before the contract is up. Under the law, customers are allowed to leave a contract without paying an exit fee within 10 days after the date of the first bill.
  • Rule No. 5: Beware of high-pressure sales tactics. Beware of people at your door who say they’re from the “electric company” or the “gas company.” Don’t give out your account number or power bill to just anybody who asks for it. That person may be trying to sign you up for an offer without your permission.

          – Jim Chilsen, Spokesman, Citizens Utility Board (CUB)


Like Jim says, having more choices only really works if customers can make informed decisions. If an alternative energy supplier can genuinely offer you a better deal than your local utility company, it might be a great way for you to save money. But before you sign up for a contract, you have to do your homework!

Contributor Jim Chilsen - OppLoans
About the Contributor: 

Jim Chilsen is the spokesman for the Citizens Utility Board (@cubillinois), a nonprofit, nonpartisan organization that has been representing the interests of residential utility customers across Illinois since 1984.

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