Electricity Contract Terms Explained Complete 2025 Guide

Fixed Rate vs Variable Rate - Making the Right Choice

Fixed-rate plans lock your supply rate for 12 to 36 months, protecting you from market price increases. Variable-rate plans:

Fluctuate monthly based on wholesale electricity costs
Can spike unexpectedly during extreme weather or supply shortages
Offer flexibility but less budget predictability

Market data comparison:

Fixed rates average 3.3% cheaper than variable over comparable periods
In volatile markets, difference can reach 20% or more during high-demand

Current PA utility rates (June 2025):

PECO: 10.40¢/kWh Price to Compare
PPL Electric: 12.491¢/kWh

💡 Bottom line: Fixed rates provide budget certainty—ideal for households needing predictable monthly expenses and long-term cost stability.

Understanding Early Termination Fees (ETFs)

Early termination fees compensate suppliers when customers break contracts before the term ends. Typical ETF structures:

$150 to $395 flat fee range (most common: $150)
$20 per remaining month – can cost more for long-term contracts canceled early

Pennsylvania ETF protections:

⚠️ No ETFs during final 30 days of any contract term
PA PUC Standard Offer Program: Rates 7% below Price to Compare with zero ETFs

Before signing any contract:

Verify the exact ETF amount in Terms of Service
Check for moving exceptions – relocating outside service territory often waives ETFs
Note the penalty-free exit window near contract end

Contract Length Impact on Rates (12-36 Months)

Contract length significantly impacts your electricity rate. Contract length comparison:

12-24 months: Best balance between competitive pricing and flexibility
36 months: Often 5-10% cheaper – suppliers secure wholesale power at lower prices
Month-to-month: Maximum flexibility but 10-15% more expensive

Trade-offs to consider:

⚠️ Long-term contracts risk missing better rates if market prices drop
Short-term plans cost more but allow repositioning

Ohio rate regulation:

PUCO regulates Standard Service Offer rates through quarterly auctions
Applies to AEP Ohio, Duke Energy Ohio, and other Ohio utilities

💡 Key factors: Evaluate your moving plans, budget needs, and risk tolerance before committing to any contract length.

Automatic Renewal Clauses - Avoiding the Trap

Most electricity contracts automatically renew at contract end unless you cancel or switch suppliers. 🚨 The auto-renewal trap:

Often converts you to variable rates or higher fixed rates
Many consumers unknowingly renew into rates 20-30% higher than competitive offers
Missed renewal notices = automatic enrollment at worse terms

State renewal notice requirements:

Ohio: 45-90 days advance notice required
Pennsylvania: Similar advance notice through PA PUC regulations
Massachusetts: DPU mandates clear renewal disclosures

How to protect yourself:

📅 Set calendar reminders 60 days before contract ends
Compare new offers through ElectricRates.org
Switch suppliers during renewal period—no penalty in most cases

State Cancellation Rights (OH, PA, MA Specifics)

Consumer protection laws vary by state for electricity contract cancellations. Rescission periods by state:

Ohio: 7 business days to cancel without penalty (PUCO enforced)
Pennsylvania: 3 business days to cancel (PA PUC regulated)
Massachusetts: 3 days cancellation right (DPU enforced)

Additional PA protection:

⚠️ No ETFs during the final 30 days of any contract term

⚠️ Important timing note: Rescission periods start from the date you receive contract confirmation, not the enrollment date. What to do:

Review Terms of Service immediately upon receiving confirmation
Cancel within the window if you find unfavorable terms
Document your cancellation request in writing

Hidden Fees to Watch For (Minimum Usage, Processing Fees)

Beyond the advertised rate, electricity contracts often include hidden fees that increase your effective cost per kWh. 🚩 Common hidden fees:

Minimum usage fees: $9.95-$25/month if you use under 500 kWh
Payment processing: $2-5 per transaction or 2-3% for credit card/phone payments
Base charges: Up to $15/month if usage falls below thresholds

Why low advertised rates can be deceptive:

Plans with $10-25 minimum fees punish low-usage customers
A "low" rate becomes expensive when fees are added

Massachusetts note: Eversource and National Grid include delivery charges regulated by DPU—these apply regardless of supplier choice. 💡 Key action: Calculate your true cents per kWh (including all fees at your usage level) before comparing plans.

Reading the Electricity Facts Label

The Electricity Facts Label (EFL) is a standardized disclosure document all competitive suppliers must provide before enrollment. What the EFL shows:

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 fixed vs variable rate type
Renewable energy percentage

Critical reading tips:

Look for average price per kWh at your typical usage level—not just the advertised generation rate
PA PUC requires disclosure of teaser rates that increase after introductory periods

Massachusetts note: DPU mandates 63.3% clean energy requirement for 2025—check the renewable percentage on EFL. 💡 Pro tip: Compare EFLs from multiple suppliers side-by-side at your actual usage level.

State-by-State Contract Regulations (PUCO, PA PUC, DPU)

Each state enforces unique contract regulations protecting electricity consumers. Ohio (PUCO):

"Fixed Means Fixed" order: Suppliers cannot change fixed rates mid-contract
Violations result in certification revocation
Requires 45-90 day advance renewal notices

Pennsylvania (PA PUC):

Standard Offer Program: Rates 7% below Price to Compare with zero ETFs
Administered through PECO, PPL Electric, and Duquesne Light

Massachusetts (DPU):

Clean Energy Standard: Suppliers must source 63.3% renewable energy in 2025
Requirement increases annually

🚫 All three states prohibit:

Slamming – unauthorized switching
Cramming – unauthorized charges

Penalties include license revocation and customer refunds.

How ElectricRates.org Simplifies Contract Comparison

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 – Unlike utility tools that update monthly
True cost calculation – All fees and minimum usage charges included
Transparent comparison – ETFs, renewal terms, and hidden fees highlighted

State-specific comparisons:

Ohio: Compares against AEP Ohio, Duke Energy, AES Ohio Standard Service Offer rates
Pennsylvania: Compares against PECO and PPL Price to Compare rates (updated quarterly)
Massachusetts: Compares against Eversource and National Grid Basic Service rates

✅ 100% free for consumers – We're paid by suppliers, not you.

Contract Comparison Checklist - 10 Essential Steps

Use this checklist before signing any electricity contract: 📋 Before signing checklist:

Verify fixed vs variable rate – Understand how variable rates change
Calculate total monthly cost – Include ALL fees at your average usage level
Confirm contract length – Matches your housing stability and moving plans
Identify ETF amount – Note moving exceptions
Check auto-renewal terms – Set calendar reminder 60 days before expiration
Review cancellation rights:
- Ohio: 7 days
- Pennsylvania: 3 days
- Massachusetts: 3 days
Compare against utility default rate
Verify renewable energy percentage – If important to you
Confirm supplier licensing – Valid PUCO, PA PUC, or DPU license
Save all documents – Contract, EFL, and disclosure forms

💡 Pro tip: Use ElectricRates.org to automate steps 2, 7, and 8.

Frequently Asked Questions

What happens when my electricity contract expires?

When your contract expires, most suppliers automatically renew you into a new term, often at a different (usually higher) rate. Ohio law requires 45-90 day advance notice before renewal. Pennsylvania and Massachusetts have similar notification requirements through PA PUC and DPU regulations. Review renewal notices carefully and compare market rates through ElectricRates.org. You can switch suppliers without penalty during the renewal period in most cases, avoiding unfavorable automatic renewals entirely.

Can I cancel my electricity contract if I move?

Most electricity contracts waive early termination fees if you move out of the utility service territory entirely. However, moving within the same utility territory (like from one AEP Ohio address to another in Columbus) typically does not waive ETFs. Always verify the moving exception in your Terms of Service before signing. Some suppliers require proof of your move like a lease termination notice or closing documents.

How do I know if I'm getting a good electricity rate?

Compare your offer against your utility's default rate: Standard Service Offer in Ohio via PUCO Apples to Apples comparison tool, Price to Compare in Pennsylvania on PAPowerSwitch, or basic service rates in Massachusetts. Calculate your total cost per kWh including all monthly fees divided by your average usage from recent bills. Fixed rates 5-15% below the utility default typically represent good value, depending on contract length and terms. ElectricRates.org performs this calculation automatically.

What is the best contract length for electricity?

12 to 24-month contracts offer the best balance between competitive rates and flexibility for most households. Longer 36-month terms may save 5-10% but risk missing better rates if market prices drop significantly. Month-to-month plans cost 10-15% more than annual contracts but allow switching anytime without penalty. Consider your moving plans and current market conditions when choosing contract length. During periods of declining wholesale prices, shorter terms allow repositioning.

Are early termination fees negotiable?

Early termination fees are typically non-negotiable and stated explicitly in your contract Terms of Service. However, Pennsylvania law prohibits ETFs during the final 30 days of any contract through PA PUC regulation. Moving out of the service territory often waives ETFs automatically. If facing financial hardship, contact your supplier to discuss options, though ETF waiver is rare unless you're moving outside the utility territory covered by your contract.

Should I choose fixed or variable rate electricity?

Fixed rates are better for most consumers because they provide budget certainty and historically average 3.3% cheaper than variable rates over comparable periods. Variable rates can spike dramatically during extreme weather, supply shortages, or grid emergencies. Choose fixed rates if you need predictable bills and plan to stay in your home for the contract term. Variable rates only make sense if you monitor wholesale energy markets closely and can switch quickly when rates increase unexpectedly.

About the author

Enri Zhulati

Consumer Advocate

Enri has spent years helping Texans navigate the deregulated electricity market at ComparePower. He knows what confuses people about energy shopping and what actually helps them save. At ElectricRates.org, he brings that same expertise to Ohio, Pennsylvania, and Massachusetts.

Electricity deregulationOhio Energy ChoicePennsylvania Power SwitchMassachusetts competitive suppliersPUCO regulations

Topics covered

electricity contract contract terms early termination fee fixed rate variable rate auto renewal PUCO PA PUC

Sources & References

PUCO - Customer Choice Rules (Public Utilities Commission of Ohio): "PUCO requires suppliers to provide renewal notices 45-90 days before contract expiration"Accessed Jan 2025
PA PUC - Electric Supplier Regulations (Pennsylvania Public Utility Commission): "PA PUC prohibits ETFs in final 30 days of contract and mandates Standard Offer Program discounts"Accessed Jan 2025

Last updated: December 10, 2025