What to look for in a contract
Remember, most contracts are written by the supplier, not by the consumer, so you need to read them carefully and make sure you understand them before signing. This is a list of the most common "gotchas" that we've found hidden in the fine print.
1. Look for any charges that are not included in the price they are offering. These can include:
- "Regulatory Change" clause: this allows the supplier to change the price you pay if there is any change in regulations. Some of these are quite broad.
- "Swing" clause: this is a very common clause, particularly in natural gas contracts, that allows the supplier to change the price that you pay if you use more or less than a certain "window" amount. Make sure you understand what those charges are – some contracts include very small "windows" or penalties that are very high.
- "Pass-through" charges: a common clause that allows the supplier to add certain charges that are not included in your price. Sometimes these are offered as an option, and they can be a useful way of controlling your costs, but make sure you are comparing like-to-like prices between suppliers. We frequently see contracts that include a pass-through for capacity or congestion charges.
- "Customer Charge": This is a per-month fee on top of what you're paying for power.
2. Make sure you understand how long the contract lasts, what are the terms for cancellation, and how long your price is good for. Some contracts we've seen:
- Some contracts offer a price that's good only for the first 6-12 months, and then it can go up.
- Some contracts are open-ended, and do not expire until the buyer cancels them.
- Some contracts are cancellable at the supplier's discretion – if the market goes up, they can dump you.
