Can I Cancel My Electricity Contract?

You shopped around for electric suppliers, found a great offer, signed a contract, and switched. You should now be kicking back and enjoying the savings pouring in, but you can’t. For whatever reason, you now want to get out of the contract and are wondering if it’s possible. Although we can’t guarantee to get you out of your current contract, we can arm you with all the necessary information about your customer rights, when canceling electricity plans.

Typical Reasons for Leaving an Electricity Provider

Cancelling an existing contract isn’t ideal but in certain situations, it might feel like your only option. What are the most typical reasons for leaving your current electric provider?

Unsatisfactory Customer Service

Poor customer service can turn even the biggest fans into haters. You received attentive service when the contract was being closed, but now you’ve gotten two erroneous bills in a row and then waited hours on the phone before getting through to a customer service agent? You are probably angry and ready to switch electricity providers. One research found that 90% of customers leave companies after a single bad customer experience.

High Rates

You might have thought that you are getting a great deal when you signed the contract, but it’s been a few months and your monthly energy bill has not gone down as much as you have hoped? Probably a good reason to look around again for a new provider.

Moving to a New Place

Your circumstances have changed and you are moving to another city or state, or perhaps just to a bigger house? Such moves can have a huge impact on your electric bills if you decide to stay with your current provider, so this might be a perfect time for switching electric companies again.

Cancelling a Contract

So, whether it’s for one of the reasons mentioned above or whether your energy plan contract is simply approaching expiration, there are a few things you want to be aware of when cancelling your electricity contract:

Notice of Contract Expiration

It is the duty of your electricity provider to notify you in writing at least 30 days prior to your contract’s expiration date. A typical notice of contract expiration from your provider should contain:

• The specific changes to the terms of electricity service being proposed
• Information on new prices
• An explanation of the customer’s options and how to exercise those options
• The date by which the customer must exercise one of the options

When you receive this notification, you have two options:

1. Renewing electricity service with your current provider, based on the proposed options listed in the notice of contract expiration
2. Switching electricity companies and selecting a new energy plan by shopping around

However, please note that if you fail to select a new electricity provider upon receiving this notice, your account might automatically be switched to a different energy plan with your current provider (often with not-so-good rates).

Early Termination Fee

Cancelling an existing electricity contract from your own initiative might not be as straightforward and will depend on the type of contract and the terms and conditions you have agreed to when you signed it. If you currently have a variable-rate contract, your monthly electricity price per kilowatt-hour fluctuates at the discretion of your providers. You can switch from this type of plan anytime at no cost.

However, if your contract is a fixed-term, switching out it too early might not be easy and will often incur early termination fees. These fees can be a flat-rate amount or be calculated, based on how many billing cycles are still left on the contract. The termination fee for your plan will be outlined in the Electricity Facts Label (EFL) of your energy plan.

Early Termination Fee Traps

Electricity providers, like any other private company, are interested in making money, so they don’t let you cancel the electricity service contract easily. There are a couple of “gotchas” in your contract that might result in an early termination fee if you are not careful:

• Confusing Contract End Dates – Rather than listing a straightforward end date on your contract, some sneaky providers put a sentence, similar to this one on your contract: “Your current plan is effective through your meter read on or AFTER October 30, 2020.” Caught the slight nuance? This sentence actually means that your contract end date is after October 30th, not on that date.
• Early Renewal Notices – Public Utility Commission in each state mandates that electricity providers must send a written notice of contract expiration no later than 30 days, but no earlier than 60 days from the contract end date. Some providers send the notice before the 60 days, roping you into renewing too early, robbing you of the opportunity to find a better supplier.

Avoiding Early Termination Fee

There are a couple of situations when you can avoid termination fees, even if you have to cancel electricity service early. These are:

• Switching Electric Provider – In Texas, you don’t have to pay the fee if you switch electric suppliers 14 days or less before the contract expiration date. Of course, a supplier is only obligated to notify you 30 days before the termination, hardly giving you enough time to shop around for a new supplier. Perhaps, our quick guide to selecting the best supplier might help.
• Moving From A Home – Your electricity contract is tied to your location, not your person. If you are moving houses, you won’t have to pay the termination fee, even if your contract has not yet ended.

We hope that this article has armed you with everything you need to know about how to switch electric companies and cancel your contract. Our parting words to you are – remember that as a customer, you have rights! Every state has a Public Utility Commission, where you can find all the necessary information and links to your customer rights.

FAQs

Can I Get Out of a Fixed Term Energy Contract?

As a general rule, it is hard to leave a fixed term electricity plan early without incurring fees. However, there are certain situations when you can exit at no cost. These scenarios include moving from a home, an expiring contract, or switching 14 days or less before the contract expiration date.

When Can I Leave Energy Supplier Without Penalty?

If you are on a variable-rate electricity plan, there are usually no fees to exit. Fixed-rate plans are trickier to exit early and you will often be penalized with a fee. You can avoid paying these fees if you are moving from a home or if you cancel your contract 14 days or less before it expires.

Updated on 06-12-23