Beware Of 3rd Party Energy Suppliers
In some regions, regulations allow for the existence of third-party energy suppliers. These companies buy energy directly from utilities and then sell it to specific HVAC customers at different rates.
The catch with all third-party energy suppliers is that they need to make a profit beyond what utility companies charge, and they will typically offer anything to customers to get them to sign over with new contracts – contracts that can be deceptive and especially expensive over the long term. This blog will help you prepare for these tactics and understand what to be wary of when considering a new energy plan.
How Do I Know If It’s a Third-Party Energy Supplier?
When in doubt, always look up electricity utilities in your area to find out what the true utility companies – those in charge of the electrical grid – are. This will make it much easier to identify third parties.
Additionally, third-party suppliers tend to be very aggressive in their sales approach. They often knock on doors and offer to help lower energy bills as part of their plans or make phone calls to try and win over new customers. They may specifically ask to see your energy bill or account information (which you should never hand over to anyone without proper authorization).
Do Third-Party Suppliers Really Offer Lower Rates?
They certainly claim to, and at first glance, their energy contracts do start out with lower rates than local utility companies may offer.
The key to the third party’s profit is that once customers switch over, they are locked into that contract, and those low starting rates are only the beginning of the contract terms.
So The Contract Becomes More Expensive?
Exactly. This happens in a couple of different ways:
- Contracts may include a lower rate for electricity than your current rate, but in the fine print, they will add on several additional, unnecessary services that have their own separate fees. That means in the end you will be paying significantly more than you used to for the same service – a practice sometimes called slamming. Third parties may pretend to be the real utility company to convince people to sign up for contracts like these.
- Other contracts will include adjustable rates, where the starting rate is very low, but the contract allows the third-party supplier to change it over time or after a certain period. That means you may pay the low rate for the first several months or so, but then the rate will jump to a much more expensive version while the user is still locked into the contract. Some people have found themselves paying twice as much as they used to because of this tactic.
- Finally, some people pretending to be third-party suppliers are outright scams and will simply steal your financial information.
Why Do Third-Party Suppliers Exist?
Generally, each state chooses whether or not to allow third-party suppliers. Ohio is one state that allows them to operate. In certain cases where independent energy plans may be difficult to arrange (such as multi-family housing), third-party suppliers can be one of the only choices. However, the scams and information theft that third-party suppliers may conduct can still be illegal. These suppliers generally count on the ignorance of users to succeed– which is why knowledge is important!
Interested in learning how your energy bills work and what important trends you should be aware of? Our blog will help keep you current, and you can always contact Guaranteed Heating & Cooling if you have any questions about a particular issue.