Electricity Contract Terms: What to Know Before Signing

Fixed-rate plans lock your supply rate for 12 to 36 months, protecting you from market price increases. What you sign is what you pay. Period.

Variable-rate plans fluctuate monthly based on wholesale electricity costs. They can spike unexpectedly during extreme weather or supply shortages. You get flexibility, but you lose budget predictability. Some people like the gamble. Most don't.

The market data is pretty clear: fixed rates average 3.3% cheaper than variable over comparable periods. In volatile markets, the difference can reach 20% or more during high-demand seasons. Variable looks great in a mild spring—not so great when a January cold snap hits.

For reference, current PA utility rates run about 10.40¢/kWh for PECO's Price to Compare and 12.491¢/kWh for PPL Electric.

Bottom line: fixed rates provide budget certainty. If you need predictable monthly expenses—and most households do—fixed is the safer choice.

Early termination fees compensate suppliers when customers break contracts before the term ends. They're how suppliers protect themselves when you bail early.

Most ETFs run between $150 and $395 as a flat fee. The most common is $150. Some plans charge $20 per remaining month instead—which can get expensive if you cancel a 36-month contract after three months.

Pennsylvania has solid consumer protections here. There's no ETF during the final 30 days of any contract term, so you can shop around near the end without penalty. The PA PUC Standard Offer Program offers rates 7% below Price to Compare with zero ETFs. Worth knowing about.

Before you sign any contract, check three things. First, verify the exact ETF amount in the Terms of Service (not the marketing summary). Second, look for moving exceptions—relocating outside the service territory often waives the ETF entirely. Third, note the penalty-free exit window near contract end. Set a calendar reminder.

Contract length significantly impacts your electricity rate. Longer commitment usually means lower price—but there's a catch.

12-24 months offers the best balance between competitive pricing and flexibility. Most people land here. 36 months is often 5-10% cheaper because suppliers can secure wholesale power at lower prices when they know you're locked in. Month-to-month gives you maximum flexibility but costs 10-15% more for the privilege.

The trade-off with long-term contracts: you might miss better rates if market prices drop. You're betting that today's rate will look good for three years. Sometimes that bet wins, sometimes it doesn't. Short-term plans cost more monthly but let you reposition when markets shift.

In Ohio, PUCO regulates Standard Service Offer rates through quarterly auctions. This applies to AEP Ohio, Duke Energy Ohio, and the other Ohio utilities. Those auction results set the baseline you're comparing against.

Before committing, think about your moving plans, budget needs, and risk tolerance. If there's any chance you're moving in the next year, shorter is smarter.

Most electricity contracts automatically renew at contract end unless you cancel or switch suppliers. This is where people lose money.

The auto-renewal trap works like this: your contract expires, you miss the renewal notice buried in junk mail, and you get rolled into a variable rate or a higher fixed rate. Many consumers unknowingly renew into rates 20-30% higher than competitive offers. That's hundreds of dollars a year—gone.

States require advance notice, but you have to read it. Ohio requires 45-90 days advance notice. Pennsylvania has similar requirements through PA PUC regulations. Massachusetts DPU mandates clear renewal disclosures. The notices go out. Whether you see them is another story.

Protect yourself. Set a calendar reminder 60 days before your contract ends. When that reminder pops, compare new offers. Switch suppliers during the renewal period if you find something better—there's no penalty in most cases. The five minutes you spend comparing could save you hundreds over the next year.

Consumer protection laws vary by state for electricity contract cancellations. Know your window.

Ohio gives you 7 business days to cancel without penalty—PUCO enforces this. Pennsylvania gives you 3 business days under PA PUC regulations. Massachusetts also allows 3 days, enforced by the DPU. Pennsylvania adds extra protection: no ETFs during the final 30 days of any contract term.

Important timing note: these rescission periods start from the date you receive contract confirmation, not the enrollment date. The clock starts when you get the paperwork, not when you clicked "submit."

Here's what to do. Review the Terms of Service immediately upon receiving confirmation—don't let it sit in your inbox. If you find unfavorable terms you missed during signup, cancel within the window. Document your cancellation request in writing. Email creates a paper trail; a phone call doesn't.

Beyond the advertised rate, electricity contracts often include hidden fees that increase your effective cost per kWh. The headline rate doesn't tell the whole story.

Minimum usage fees hit you if you use under 500 kWh monthly. These run $9.95-$25/month and can wreck the math on that "low" rate you thought you were getting. Payment processing fees add $2-5 per transaction, or 2-3% for credit card or phone payments. Base charges of up to $15/month kick in if your usage falls below certain thresholds.

Here's why low advertised rates can be deceptive: plans with $10-25 minimum fees punish low-usage customers. If you're in an apartment or just efficient with energy, that "lowest rate" might cost you more than a higher rate with no fees.

One note for Massachusetts: Eversource and National Grid include delivery charges regulated by the DPU. You pay these regardless of which supplier you choose. They're not hidden, but they're also not part of the rate you're shopping for.

Before comparing plans, calculate your true cents per kWh including all fees at your actual usage level. That's the number that matters.

The Electricity Facts Label (EFL) is a standardized disclosure document all competitive suppliers must provide before enrollment. It's the nutrition label for electricity plans.

The EFL shows you the exact rate at different usage levels (500, 1000, 2000 kWh), how monthly fees impact your effective cost, contract length and early termination fees, renewal terms and whether it's fixed or variable, and the renewable energy percentage. All the important stuff, in one place.

How to read it: Look for the average price per kWh at your typical usage level, not just the advertised generation rate. That's the number that matters. Pennsylvania PUC requires disclosure of teaser rates that increase after introductory periods—watch for those.

Massachusetts has a DPU mandate for 63.3% clean energy requirement in 2025. If you care about renewables, check the percentage on the EFL.

Pro tip: compare EFLs from multiple suppliers side-by-side at your actual usage level. It takes an extra few minutes but reveals which plan truly costs less.

Each state enforces unique contract regulations protecting electricity consumers. These matter.

Ohio (PUCO) has a "Fixed Means Fixed" order—suppliers cannot change fixed rates mid-contract. Violate that, and you lose your certification. They also require 45-90 day advance renewal notices, giving you time to shop around.

Pennsylvania (PA PUC) runs the Standard Offer Program through PECO, PPL Electric, and Duquesne Light. It offers rates 7% below Price to Compare with zero ETFs. If you qualify, it's worth checking out.

Massachusetts (DPU) focuses on clean energy. Suppliers must source 63.3% renewable energy in 2025, and that requirement increases annually.

All three states prohibit slamming (unauthorized switching) and cramming (unauthorized charges). Get caught doing either, and you face license revocation and customer refunds. The regulators take this seriously.

ElectricRates.org eliminates the complexity of comparing electricity contracts by presenting all essential terms side-by-side in plain language.

What makes us different? Real-time rates, for one. Unlike utility tools that update monthly, we show what's available right now. We calculate true cost including all fees and minimum usage charges—not just the headline rate. And we highlight ETFs, renewal terms, and hidden fees so you see the full picture.

For Ohio, we compare against AEP Ohio, Duke Energy, and AES Ohio Standard Service Offer rates. Pennsylvania comparisons use PECO and PPL Price to Compare rates (updated quarterly). Massachusetts comparisons run against Eversource and National Grid Basic Service rates.

The service is 100% free for consumers. We're paid by suppliers when you switch through us, not by you. That's how we keep the lights on.

Before signing any electricity contract, run through these ten things.

First, verify whether it's a fixed or variable rate and understand how variable rates can change. Second, calculate your total monthly cost including all fees at your average usage level—not just the headline rate. Third, confirm the contract length matches your housing stability and moving plans. Fourth, identify the ETF amount and note any moving exceptions.

Fifth, check the auto-renewal terms and set a calendar reminder 60 days before expiration. Sixth, know your cancellation rights: Ohio gives you 7 days, Pennsylvania 3 days, Massachusetts 3 days. Seventh, compare the offer against your utility's default rate to see if you're saving money.

Eighth, verify the renewable energy percentage for environmentally-conscious customers. Ninth, confirm the supplier has valid licensing with PUCO, PA PUC, or DPU. Tenth, save all documents—the contract, EFL, and disclosure forms. You'll want them if something goes wrong.

ElectricRates.org handles steps 2, 7, and 8 automatically.