Deregulation came about because many states decided that it was economically unwise to regulate utilities.

In total, twenty-three states have since deregulated energy and now allow electricity companies to competitively price their services. This invokes the law of supply and demand. What consumers demand in price, they often get. The price of power has gone down considerably in this deregulated market.

If you live in a state with deregulated energy services, then you have the freedom to choose your power company.

Before you make the choice, you will ensure yourself the best possible savings.

There are factors beyond price you have to consider. Not everything cheap is good. You also need to know how electricity is billed before you can make the decision that best works for you.

Electricity companies offer two types of plans. These plans are fixed rate and variable rate.

A fixed rate plan locks you in a set price per kilowatt per month. This price is determined by the power company. The company, which pays a wholesale cost for electricity that may change from month to month, estimates and averages the median cost for the duration of a contract. The customer then pays the agreed rate regardless of how the price fluctuates on the open market.

A variable rate plan charges kilowatt hours based upon the wholesale price that the reseller is paying for the power. One month, the price of the variable rate may be much lower than price of the fixed rate. This savings is passed on to the customer, who will pay less than a person on a fixed rate contract. However, the next month, the price of the variable rate may be much higher, and the person may pay much more than a person on the fixed rate plan.

Sometimes people sign up for a variable rate because it is month to month and sold on a no contract basis. They believe they will save a fortune. Then they get surprised when the price suddenly rises.

You may have read negative online reviews about certain electricity companies. You may have also heard personal stories from consumers about how they did not get what they expected.

These testimonials are normally the result of the consumer not being fully aware of the nature of the rate plan they were signing up for. In these cases, they expected one thing, and they got another. No one deliberately tricked them or robbed them. However, no one explained the details to them fully, either, so when assumptions kicked in, the power company got blamed.

This can be avoided by talking to customer service first.

Before you call, study the electricity company’s variable and fixed rate plans online. Look at the contracts and terms of the contracts. Write down notes and questions. Then, call customer service and ask for a detailed explanation. Document the name of the representative to whom you speak and the date and time of the call.

This will give you all the information you need to make the best decision on which electricity company to choose.

If you are thinking about switching from your electric company to a new electricity supplier or