Can You Switch Electric Companies If You Owe Money?
Explore the considerations for changing electric providers when an existing balance is a factor.
Consumers in many parts of the United States can select their electric provider due to energy market deregulation. This choice allows for competition among energy suppliers, benefiting consumers. Many individuals switch providers for more favorable rates, specific energy types, or improved customer service. This ability to choose aims to foster innovation and reduce costs for households and businesses.
Defining an Outstanding Balance
An outstanding balance with an electric utility refers to any money owed to the provider that has not yet been paid. This can include several types of charges that accumulate on a customer’s account. It commonly involves past-due monthly bills. Utilities apply late fees if a payment is not received by the due date, adding to the total outstanding amount.
Another component of an outstanding balance is unbilled usage, representing electricity consumed during the most recent billing cycle that has not yet been formally invoiced. When a customer switches providers, the former company issues a final bill including all unbilled usage up to the termination date. Customers on fixed-term contracts may also face early termination fees (ETFs) if they end service before the agreed-upon contract period expires. These fees can vary, or be a prorated amount based on remaining contract months.
How an Outstanding Balance Affects Switching
Having an outstanding balance directly impacts a customer’s ability to switch electric providers. Most existing electric companies require customers to settle any past-due amounts or establish a clear payment arrangement. This must occur before they will release the account for transfer to a new provider.
New electric companies conduct credit checks when an individual applies for new service. This check assesses the applicant’s payment history and financial reliability. If a customer has a history of unpaid bills or a significant outstanding balance, the new provider may consider this a risk. The new company might then require a security deposit before initiating service. These deposits can be an amount equivalent to one to two months of estimated billing, or a letter of guarantee from another person may be accepted.
Strategies for Addressing Your Debt
Addressing an outstanding electric bill requires proactive communication with your current provider. One strategy involves contacting the utility to set up a payment plan. These plans allow customers to pay off their past-due balance in smaller, manageable installments over a specified period, while also keeping up with current charges. Many utilities offer both short-term and longer-term arrangements.
Customers may also inquire about negotiating a settlement, particularly if the outstanding amount includes significant late fees or early termination charges. Discuss all available options directly with the provider’s customer service department. For eligible individuals, energy assistance programs can provide financial relief. The Low Income Home Energy Assistance Program (LIHEAP) is a federally funded initiative that helps low-income households manage heating and cooling costs. Eligibility for LIHEAP is based on household income and size, offering one-time payments or crisis grants for those facing immediate disconnection.
Navigating the Switching Process
Once any outstanding balances have been addressed, the process of switching electric companies involves several steps. Begin by researching and comparing available electric plans and providers in your area, focusing on rates, contract terms, and any associated fees. Many online tools and state public utility commission websites offer resources for comparing energy options.
After selecting a new provider and plan, complete an application with the new company, online or over the phone. This application requires basic personal information and details from your current electric bill. The new provider then communicates with your previous utility to facilitate the account transfer, which does not interrupt service. You will receive a final bill from your old provider, reflecting any remaining charges or credits. The new service begins on a specific date, and you will receive bills directly from your chosen new provider.