How to Compare Electricity Plans: Rates, Time-of-Use Pricing, and Exit Fees

The cheapest electricity plan on a comparison page may not be the cheapest plan for your home. A rate advertised at 1,000 kilowatt-hours (kWh) can depend on a bill credit you won’t earn at 900 kWh. A “free nights” offer can cost more if your air conditioner runs hardest before those nights begin.

The useful comparison is not cents per kWh in isolation. It’s the estimated cost of each plan using your household’s monthly consumption, the hours you use power, and the contract terms that apply when you leave. You can do that comparison with a year of bills and, for time-of-use plans, an hourly usage report if your utility provides one.

Start with the part of the bill you can change

First, check what kind of choice you have. In some areas, you can choose a competitive electricity supplier; in others, you can choose among rate plans offered by your utility. Availability depends on your service address, so a plan advertised elsewhere may not be an option for you.

If you’re shopping for a supplier, identify which charges will actually change. In Pennsylvania, for example, the local utility continues to provide distribution service when a customer changes electricity suppliers. Its “price to compare” is a benchmark for the supply portion of the bill, not the entire bill. By contrast, a Texas retail plan’s quoted average price may include both the provider’s charges and recurring delivery charges. Don’t compare a supply-only quote with an all-in quote as though they cover the same costs.

Pull your last 12 bills and record the kWh used each month. A yearly average is a good starting point, but keep the monthly figures: a household that uses 600 kWh in spring and 1,500 kWh in summer may rank plans differently in each season. Note your existing supply rate, monthly fees, contract end date and any cancellation fee. If you’ve recently added an electric vehicle, changed heating systems or moved, adjust the old usage figures rather than treating them as a forecast.

Turn each rate into an estimated bill

For a straightforward plan, use this calculation:

Estimated monthly plan cost = (monthly kWh × rate per kWh) + recurring plan fees − credits you qualify for.

Add delivery charges if they aren’t included in the quoted rate and you want to estimate the full bill. For a supplier-only comparison where the same delivery charges apply under every option, you can leave those shared charges out—but leave them out of every option, including your existing one.

This is why a low advertised rate needs a second look. The Pennsylvania Public Utility Commission’s shopping results distinguish supplier prices from utility distribution charges and show that offers can also carry monthly fees. A fee changes the effective price most for a low-usage home: $10 a month adds 2¢ per kWh at 500 kWh, but only 1¢ at 1,000 kWh.

Usage-based credits can have a sharper effect. Consider two imaginary offers:

At 1,000 kWh, Plan B looks better. At 700 kWh, it loses. If your usage lands just below the credit threshold, the bill can jump even though you used less electricity than expected. Work through at least a low-use month, a typical month and a high-use month before choosing a plan built around a threshold.

In Texas areas open to retail choice, the Electricity Facts Label (EFL) is an essential check. The state’s electric-plan guidance explains that displayed average prices at set usage levels may not match what you pay at your actual usage. Read the EFL’s price formula, not just its 500-, 1,000- or 2,000-kWh averages. Look for a base charge, delivery-charge treatment, minimum-usage charge and any credit that applies only within a specified range.

For a fuller comparison, calculate each plan’s cost for all 12 months and add the results. That gives you a more useful annual estimate than multiplying one “typical” bill by 12. It’s still an estimate: weather, household changes, taxes and charges that can change during the term may affect the bill.

Compare fixed and variable rates on the right terms

A fixed-rate plan locks in the specified energy price for a term; it doesn’t promise an identical monthly bill. Your usage still changes, and the contract may allow certain delivery charges or other items to change. Read exactly what the provider calls “fixed.”

A variable rate can change under the terms of the agreement. It may suit someone willing to check bills regularly and switch if the price stops being competitive. It’s a weaker fit if you need predictable pricing or won’t have time to monitor it. The Pennsylvania utility commission’s explanation of fixed and variable offers notes both the potential for variable prices to rise and the possibility that a fixed contract carries a cancellation fee.

Check how long an attractive price lasts. A three-month introductory price is not a 12-month price, even if the offer is presented beside 12-month plans. Ask what happens after the promotional period and whether the later rate is fixed, variable or not yet known. If the later price isn’t specified, you cannot make a reliable yearlong cost estimate from the introductory rate alone.

The same caution applies at contract expiration. Your renewal terms may differ from the original offer; in Pennsylvania, a supplier may continue service on different terms if you don’t respond to expiration notices. Put a reminder on your calendar well before the end date, when you’ll still have time to compare the next offer.

Test time-of-use pricing against your hours, not your habits in theory

Time-of-use plans charge different rates at scheduled times, commonly with higher prices during peak hours and lower prices off-peak. Those hours—and sometimes the rates—can change by season or day of the week. A “free” period does not mean the whole bill is free: check which energy and delivery charges still apply. Time-of-use pricing also differs from a variable plan whose price changes from month to month or an hourly price tied more closely to market conditions.

For a time-of-use estimate, split your consumption into the plan’s pricing periods:

Estimated energy cost = (peak kWh × peak rate) + (off-peak kWh × off-peak rate)

Then add fees and any other applicable charges. Suppose you use 900 kWh in a month. A time-of-use offer charges 24¢ during peak hours and 10¢ off-peak, while a flat-rate alternative charges 16¢. If 300 kWh falls in peak hours, the time-of-use energy charge is $132, versus $144 on the flat rate. If 500 kWh falls in peak hours, the time-of-use charge rises to $160. These examples assume the plans have identical other charges.

The key question is how much power you can realistically move. An EV that can charge overnight may help. Laundry and dishwashing may move easily too. Cooling a home on a hot afternoon may be harder to shift, and it can account for substantial use precisely when a plan’s peak rate applies. Don’t assume your overnight share is high just because everyone is asleep then.

Check your utility account for hourly or shorter-interval usage data. Some providers offer downloads using the Department of Energy’s Green Button energy-data standard; the detail available varies by utility and may be hourly, daily or monthly. Match any interval data to the specific plan’s peak hours, weekends, holidays and seasons. If only monthly totals are available, ask the provider for a bill comparison using your historical usage, but treat any assumed peak/off-peak split as an estimate. Texas regulators warn that time-of-use averages shown on plan labels rely on estimated usage splits, which may differ from yours.

Price the exit before signing

An early termination fee matters most when your plans might change: a move, a possible job relocation, or simply a better rate elsewhere. Find the fee in the contract or disclosure, along with how it is calculated and when it stops applying. It may be a flat amount or depend on the time left; don’t assume two fixed-rate offers handle it the same way.

If you already have a contract, compare the fee with the savings from switching. A new plan estimated to save $12 a month would save $72 over six months. Paying $150 to leave the old plan would put you $78 behind over that period, before considering any other differences. Recheck the math using the months you expect to stay on the new plan—not an arbitrary full year.

Rules and exceptions vary by state. Under Texas retail-electric customer rules, a customer who relocates can avoid an early termination fee by providing a forwarding address and, if requested, reasonable evidence of the move. Pennsylvania’s rules provide a different fee-free window near contract expiration. Check the rules for your state and the wording of your agreement rather than relying on a salesperson’s general assurance.

Before enrolling, keep a copy of the offer and confirm five points in the final contract: the rate formula, all recurring fees and credits, the peak-hour schedule if applicable, the cancellation terms, and what happens when the price or term expires. The best choice is the plan with a favorable cost under your likely usage—not the one with the lowest number on the results page.