ESCO stands for Energy Service Company. ESCOs supply electricity and/or natural gas, which the utility delivers. Regardless of your energy’s source, your local utility will continue to deliver your electricity and respond to service interruptions and outages. You will still be billed and pay your utility for these services.

No. While you can choose an ESCO for your supply, if you don’t choose one, your utility will deliver power from its default supply source. This is often cheaper than ESCO supply prices. 

ESCOs were introduced following the deregulation of the utilities at around the same time that telephone and transportation monopolies were disbanded. The idea was that increased competition would deliver lower prices and better customer service. There is significant debate as to whether this has in fact occurred. 

Your utility’s default supply rate is variable. The price of each kilowatt-hour (kWh) changes each month, based on market conditions. Some ESCOs offer fixed rates for a certain period of time, with 6 months, 12 months or 24 months being the most common. Your price per kWh will remain the same for that period of time and then become variable. If you choose an ESCO with a fixed rate, mark your calendar for a month or two before your contract ends to again review the various ESCOs offering fixed kWh prices.

You may be interested in ESCOs if you prefer a fixed rate or if you would like to purchase 100% renewable energy. You should know, however, that the Department of Public Service has discovered that many ESCOs use deceptive practices. For example, in 2022, the state recorded 575 [pdf] initial complaints against dozens of ESCOs statewide. With this in mind, we encourage individuals to be very careful if and when they choose an ESCO. If you decide to use an ESCO, here are some features you may want to look for:

• 100% renewable energy delivered to the grid

• Price per kWh is acceptable to you 

• No substantive negative reviews

Many ESCOs have come under recent scrutiny from state officials due to reports of ESCOs charging more for electricity supply than most utility companies in the long run. A common practice among ESCOs is to start customers at a lower price for one to three months and then sharply increase it. This costs customers more in the long term.

Community subscription solar provides credits from a large-scale solar array that offset your electric bill; it does not replace your energy supply. ESCOs, on the other hand, supply the energy. Residents who do not own solar panels can have both at the same time. Community subscription solar offers savings on your total electrical bill regardless of whether you have a third-party supplier like an ESCO. Signing up for community subscription solar won’t change where you buy your power or who supplies it — you just receive a discount on your bill for supporting a solar farm in your utility area.

While you can choose a 100% renewable energy ESCO to purchase power from to ensure all your electricity is from renewable sources, you may also consider doing other things. For example, you could reduce the amount of energy you need through energy efficiency upgrades. We recommend residents get an energy assessment of their home to determine what options are available to them. Weatherization, lighting and appliance upgrades can all help reduce your energy use and maybe eliminate the “gap.” You could also increase the size of your home’s solar array to meet your energy needs.