It’s Tricky…It’s Tricky

What to know about leaving a gas or electric contract to avoid fees

Recently I received a renewal letter from my natural gas supplier. I did not like the new price, terms and cancellation fee offered, so I called to cancel the renewal. I wrote down the date I called and asked for a cancellation number. However, within two weeks, I received another letter with the same offer and was concerned I would be swept into a renewal price I did not want.  I had to call again and confirm that indeed, my account was cancelled. Why did I receive a second letter after I cancelled?

It’s all about timing. I called to cancel two weeks after I had received the initial renewal letter. While the supplier cancelled my contract, an automatic 2^nd notice was issued two weeks after I received the first letter. The supplier could not stop the second letter from being sent as it was in an automatic queue. Having been in the electric supplier/broker business for over 10 years, I know what happened but wanted to give a few tips to those who do not regularly shop or can’t remember the last time they entered into a supply agreement.

Why is it so tricky to get out of an electric or natural gas contract? There are so many reasons, but the main reason is that your utility has established meter read, enrollment, rescind and drop schedules that suppliers must follow in order to start or end customer contracts. Of course, these schedules can cause problems because there are windows of dates surrounding enrollments and drops which can trigger unintended starts or stops. If customers sign up or end a program early, termination fees can apply, and everyone wants to avoid that!

So, what can you do to make sure you avoid being caught with an early termination fee or being stuck with a renewal price that is much higher than you expected because you enrolled too late?  Here are some handy tips to help you navigate the contract.

When you sign-up for a generation contract, know:

1. The price you agreed to
2. The start date of the contract
3. The end date of the contract
4. The amount of the early termination fee if there is one
5. Any monthly fees (avoid these, but if you have them, note them)
6. The call center phone number for the supplier you select
7. Your account number with the supplier.

It is important to calendar your contract end date and keep the above information on that calendar date.

Renewals or Early Termination Fees – I have no idea what I signed up for and now I am receiving a letter or a fine:

If you didn’t calendar the information you needed to keep track of your supply agreement and recently received either a renewal letter from your current supplier or an early termination fine from your current supplier, here are some guidelines.

“Yeah, I saw the notice, but I didn’t think it was real” – Why you need to read your mail, whether old-school mailbox, email, or text message:

If you do not read your renewal notice or you choose to do nothing about it, i.e., throw the notice in the trash, think that it is spam, etc., a supplier can automatically enroll you in a renewal program. However, suppliers are required by law to send you notice(s) before they lock you into a renewal contract. When you get the notice, you will have to decide quickly – accept the new offer and do nothing or call the supplier and reject the new offer. Sometimes suppliers will offer you a better price or different options on a call and you can decide if you want the new offer.  If you still do not want the offer, cancel it and always, always ask for a cancellation number, write it down and write down the date you cancelled the agreement.

If you are charged an early termination fee from your current supplier, that means you have signed up for an offer with another supplier before your current contract has expired. You should immediately call the party charging you the early termination fee and see if it can be waived.  If not, you will have to calculate the annual savings with a new price compared to the old price you were paying. If that is more than the cancellation fee, you might just pay the early termination fee and switch.  If you do choose to cancel your current contract, always make sure you ask for a confirmation number, and write it down along with the date of the call.

The Strategy:

The best case is to enter into agreements with a small to no early termination fee. That way, you have the ability to enter into contracts with the freedom to move in and out whenever you wish. If there is a termination fee but the price is so good and you plan to stay in a contract for the full term, make sure to know the end date and price, so you are ready to start looking before the end of your current contract. Finally, if you are with or you choose to go back to your utility, you can stay there and move to a new contract at any time without penalty.

Be careful out there!

Lori

Image Credit: Cytonn Photography