A cancellation fee on an energy contract is worth paying when the rate delta plus remaining contract length covers the fee. Break-even formula: Fee divided by (rate delta in cents/kWh × monthly kWh × remaining months). If less than 1, switching saves money. Example: $150 fee, 4 c/kWh delta, 877 kWh/month, 12 months remaining = $150 / ($0.04 × 877 × 12) = 0.36. Strong switch.
The break-even formula
Calc: Fee ÷ (rate delta in cents per kWh × monthly kWh × remaining months in contract).
Less than 1 = switching saves money. Greater than 1 = stay on existing contract.
Example: $150 fee, $0.04 better rate, 877 kWh/month, 12 months remaining. Formula: 150 / (0.04 × 877 × 12) = 0.36. Strong switch.
When to stay despite fee
Fee high + small rate delta = stay. Example: $300 fee, 1 c/kWh delta, 877 kWh/month, 6 months remaining. Formula: 300 / (0.01 × 877 × 6) = 5.7. Stay.
End of contract approaching (under 3 months remaining) + small delta = usually stay and re-shop at expiration. No fee at end of term.
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