May 19, 2025
When it comes to managing your home or business energy costs, predictability is power. That’s why choosing a multi-year contract can be one of your smartest moves –– especially in a volatile market.
Instead of worrying about market trends or renewal deadlines every few months, these contracts allow residential customers and small business owners one less thing to think about. They can set it and forget it, while staying protected. That means better financial planning and no shock when their bill arrives.
What is a Multi-Year Contract?
A multi-year contract is a long-term agreement between a customer and their chosen energy supplier that locks in a fixed price for a customer’s electricity or natural gas supply over a defined term length, with 12, 24, and 36 months as the most popular term lengths. Customers can budget for their energy expenses with peace of mind knowing their rate won’t change for the length of the contract.
These contracts shield buyers from market fluctuations by providing price stability and cost predictability –– but that’s not all they can provide. Multi-year contracts can include value-added services such as:
- Electricity generated by 100% renewable energy
- Bill credit if their monthly usage equals or exceeds a predetermined number of kilowatt hours per month
- Smart home technology product
Looking Ahead
While long-term, fixed price contracts provide multiple benefits, just like with any contract, it is still important to carefully review the terms before signing on the dotted line. What customers should pay close attention to includes, but is not limited to, the following:
- Contract Start and End Date: Make sure to mark both these dates on your calendar so you’re well prepared, especially when the contract ends, so you can start planning for what to do after your contract ends. Depending on your state’s regulations, the supplier will provide the date when the supply service will change.
- Automatic Renewal: Some multi-year contracts include automatic renewals, so once your current contract ends, you could automatically be renewed with the same supplier. However, your current contract terms may no longer be available. The renewal could potentially include different terms or a new price. Your supplier is required to provide a renewal notice and renewal terms for your review prior to the expiration of the original contract, which will include any updated terms and/or changes to your rate. It’s important to check your contract, as noted above, for the renewal date and any notice period required to avoid being locked into a new term you didn’t intend to agree to.
- Terms of Service (TOS) and Contract Summary: The plan’s TOS document outlines the terms and conditions of your service with the supplier, while the contract summary provides a full, detailed breakdown of the plan.
With growing concerns about rising electricity costs and energy affordability, multi-year, fixed-price contracts can provide peace of mind. They enable consumers to lock in a stable rate, allowing them to budget accordingly and shield themselves from unexpected price hikes. Energy prices can fluctuate, but if you choose a long-term fixed rate, your bill will be more predictable.
The Retail Energy Advancement League (REAL) is a national advocacy organization dedicated to the expansion and modernization of American retail energy markets. In many states, utility monopolies still control the electric market and customers can’t choose where they buy their electricity and gas.
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