When it comes to finding low electricity rates for your home, you have several shopping venues from which to choose. You could respond to direct marketing offers from competitive electricity suppliers. Checking out electricity provider websites is also an option. A visit to the state-run electricity rate board is not a bad idea. However, these websites are notoriously overrun by every available provider and offer in the market. Private customer choice sites are a great option and are generally more selective about the electricity providers and rate plans they list. A relatively new alternative for consumers are electricity shopping services.
Electricity Shopping Services
Shopping services are relatively new to home electricity market. The basic premise is that you grant the electricity shopping service (ESS) the authority to enroll you in electricity plans. In other words, the ESS acts as your agent when it comes to shopping for low electricity rates. Ideally, the ESS also has access to your electricity usage data and uses this information to select the best plan for your individual needs.
ESS providers use two basic business models. The first is a subscription-based service where the customer pays a monthly fee for the shopping service. This type of ESS usually does not receive a commission from the electricity provider. In theory, this gives the ESS access to all electricity providers and rate plans in a given market. The ESS will simply take offers from the state electricity-shopping website and load them into their database. Then, it is just a matter of seeing which plan results in the lowest electricity bill for your home.
The second ESS provider model does not charge the customer a monthly fee. Instead, the ESS receives a commission from the electricity providers. The technology is the same as the subscription-based ESS providers. They match your usage history up against their rate plan database to find the lowest cost option. The primary difference is that their database is limited to those providers with whom they have affiliate marketing agreements.
The downside to using an ESS is the laser-like focus on cost. To be sure, one of the primary goals of electricity deregulation is lowering costs for consumers. However, customer choice program benefits also include innovation, enhanced customer service, and value-added products and services. Furthermore, electricity providers vary widely in terms of customer satisfaction and loyalty programs.
Consumer Shopping Models
Compare an ESS to a travel website. You can visit a travel website to search for low airfares. Under the ESS model, you would give the travel website authorization to not only search for the lowest airfare but to go ahead and book your trip. Most of us would not want to handle our travel arrangements in this manner. We like to choose our flight times, connections, and the airline on which we fly. Perhaps we had a bad experience with a particular airline or we are trying to accumulate miles with our preferred carrier. Travel shopping websites abound but shopping services that make binding decisions have not gained favor with consumers.
In fact, there are few examples in the field of consumer goods and services that use this hands-off shopping model. Recently, there has been an increase in the number of “subscription box” services. These services send subscribers boxes with everything from dinner kits to clothes to cosmetics. For non-perishable box contents, you just send back anything you do not want. The problem is that electricity customers typically do not have this option. If the ESS signs you up for a 12-month offer and you are unhappy after the first month, you will typically have to pay an early termination penalty to switch electricity providers.
The point is that there is so much more to shopping for electricity offers than just price. Low rates should be a major component of your decision. Customer service, ease of doing business, value-added services, and other factors also matter. For some people, electricity-shopping services may be fine. However, for most consumers, choosing an electricity plan that meets their needs is something that should not be outsourced.