When a renter is shopping for electricity, is import to know exactly how many months are left on your lease, and whether or not you are going to renew your lease.
Because Texas electricity rates are currently at extreme lows, locking in these rates for the long term makes perfect since. But for renters, that is not always the best route to go.
Because residential energy contracts have early termination fees, you need to be careful on the term length you opt for.
For example,suppose you lock in a 12-month rate, yet only have 11 months remaining on your apartment lease. When you call your provider to turn off the electricity, you are going to be hit for an early termination fee. Even though you only have just one month remaining on your electricity contract and you are moving out, you are going to have to pay the entire fee. This fee normally runs anywhere from $150-$250.
There are three ways to avoid paying the early termination fee, though only two realyl make sense. The strategy that you should avoid is opting to be on a variable rate for the entire time. Variable rates are currently running 35% higher than fixed, so you would be deep underwater by going that route.
The second strategy is to lock in a great rate for a time frame that is just shorter than your lease term. For example, it makes sense to sign up for an 9-month energy term because you have 10 months left on your apartment lease. For the final month, just go on a month-to-month variable. You’ll over pay for the single month, but it’s still not as bad as overpaying for 10 months.
The last strategy, and the one that makes the most financial sense, is to choose a provider that has a pro-rated early termination fee. There are providers that will charge you a pro-rated fee based on the number of months remaining on your contract, and this usually runs $20 per remaining month. Not bad! You have the benefit of locking in the fantastic low rate, and you have a relatively cheap charge to end the contract early. So if you signed up for a 12-month electricity plan but move out after 11 months, it’s only going to cost you $20 to break the contract instead of $150 that the other providers would charge you. Now that makes sense!