Types of Pennsylvania Electricity Contracts
Pennsylvania consumers have a great access to several different types of electricity service agreements with some of the best electricity rates available in the US. With so many choices available in the state's crowded deregulated power industry, service plans come in all shapes and sizes, meaning term lengths, price rates, usage levels, Smart plans, and Green Energy options. All of these factors play important roles into whether or not an electricity plan is the right one for a customer's needs. Here is a quick breakdown of what encompasses a basic electricity service agreement.
There are four basic types of electricity provider service agreements; the Quarterly contract, the Fixed Term contract, the Spot contract, and the Ongoing contract.
The Quarterly Contract
A quarterly contract is a three-month electric agreement. It's also commonly known for obvious reasons as a three-month term contract. In this type of power agreement, the electricity price-per-kilowatt-hour is assessed four times a year - every three months. When a customer's electricity rate changes, they should receive a notification from their provider stating their new electricity rate 30 days prior to when the pricing period is to begin.
The Fixed Term Contract
In the fixed term contract, a consumer has a 12-month, 24-month, or 36-month fixed rate power agreement in which they are contractually bound to a minimum contract term length and also a set kilowatt-per-hour rate. Electric prices remain unchanged throughout the length of the agreement. Before the end of the contract term, the customer will receive an offer to extend their electricity contract before the power agreement's timeframe ends.
The Ongoing Contract
An ongoing contract is valid until further notice from either the plan holder or their power provider. It has a notification period of two weeks. Customers enjoy balanced price fluctuations; both short term and long term. Ongoing contracts are great for customers who want an unchanging and convenient ongoing electricity service, from just one provider - But also still want the freedom to switch electric providers whenever they-so-choose.
The Spot Contract
A spot contract utilizes a commodity-based current market-price average for calculating the power agreements average kWh rate. With a spot market electricity agreement, the electricity plan holder simply pays market prices for their electricity consumption. This price consists of the utility company's delivery charge, the spot energy kWh price on the current market, and the electric provider's added price margin.
With a spot contract, the average kWh rate can change on a monthly basis, due to the power agreement following the constant price changes in the current energy market. A spot contract's notification period is approximately two weeks. Spot power agreements have a rate-cap that protects the consumer by ensuring that the maximum kWh price of a customer's electric service agreement never exceeds a pre-determined rate ceiling ? preventing inflated power plan prices.
Determining the right electricity contract
Knowing the different types of electricity contracts involved in service agreements is a great starting point when you compare electricity rates. Pennsylvania utility providers are required to provide consumers with an Electric Generation Supplier Contract Summary (EGSCS). You can start to use the legally required EGSCS statements, which are readily accessible to consumers in all of Pennsylvania power provider's electricity plan quotes, in order to figure out which electricity plan falls into the categories explained above. Now that you know a little bit more about some of the different electric contracts available on Pennsylvania's competitive utility marketplace, you can then easily determine which power contract best represents your residential or business electricity needs.