The truth about cheap supplier teaser rates

How a teaser contract is structured

Suppliers price the first 1 to 3 months of the contract dramatically below market — often at a loss — to win the customer enrollment. The contract then specifies a re-rate price for the remaining term. The re-rate is usually pegged to the utility default plus 10 to 25 percent or set at a fixed rate above wholesale forwards.

The re-rate is buried in the contract clauses, not advertised in the marketing. Cancellation fees of $50 to $200 lock the customer in. Most customers do not notice the re-rate until 2 or 3 high bills later, by which point the cancellation fee has paid for itself for the supplier.

The 4 red flags that spot every teaser

Flag one: rate dramatically below market. If the offered rate is more than 25 percent below the utility SSO, ask exactly how long that rate holds.

Flag two: short introductory period. Anything under 6 months is suspect. A clean fixed-rate contract locks for 12 to 24 months at a single price.

Flag three: cancellation fee present. Reputable suppliers offer fee-free contracts or fees no larger than 1 month of supply. Anything over $100 with a sub-12-month intro is a teaser.

Flag four: silence on the re-rate price. If the offer summary does not state the rate that applies after the intro period, walk away.

What to ship instead

A clean 12 to 24 month fixed-rate contract priced 8 to 14 percent below the utility SSO is the right structure for most US households. The rate holds for the full contract term. Cancellation fees are zero or under $50.

Seenra screens every supplier for these structural features and surfaces only the clean contracts in our quote tool. The teaser plans listed on state-PUC comparison sites are not vetted; we filter them out.