First, I would like to wish all the blog readers a very Happy New Year, and I hope everyone can travel to many exciting destinations this year. I want to share my story about how I got duped by an energy provider that lured me in with an enticing offer of 25,000 miles.
I hope you can take my story and can learn from a mistake I made. It’s almost every day that I receive “a speical offer” from United, American, Southwest, and every other airline under the sun, promising a large chunk of miles to switch energy providers. I’m now ashamed to say that I took advantage of (or should I say was taken advantage of) an offer to earn miles by switching to Energy Plus.
The “Deal”
I received 25,000 United miles for switching to Energy Plus, which supposedly advertised energy a competitive “variable rate” each month. In addition, I also received United miles each month for my “inflated” payment.
I figured over time the so called “variable” rate would be close to what my original provider was charging me. After all, prices are determined by supply and demand, right?. Plus, how many people actually really look at their electric bill to see their cost of KHW per unit? I sure didn’t. Almost 2 years later, I am sorry to say, I jumped on this deal back in August 2013.
I can now officially report that I canceled my service last month after doing some of my own research and comparing my costs.
Below I will show in my illustration how I paid 93.25% more in 2015 to switch providers using my actual 2015 results. I did not research 2014, because the pattern is apparent – about 2x regular cost. It appears that my 25,000 United miles were received at a very expensive rate
The moral of the story is to follow some old-fashioned advice: with anything in life, do your homework, and when something seems “too good to be true”, it usually is.
If you also switched energy providers to earn miles, please take the time to look at your electric bill and pay careful attention to the KHW per unit charge.
I would love to hear other experiences too.
Happy Travels,
The Dad.
I got suckered about 5 years ago… with a deal too good to be true. I don’t remember the name of the energy company, but it was a deal with Starwood. After reviewing my bill for the first 3 months (it didn’t feel right), I was able to cancel.
Frequent flyers get bombarded with these ‘deals’ all the time. We’re suckers for a good deal.
For now, I’ll stick to credit cards for new mileage earning opportunities.
Hi Dan
Hope all is well. All along i was blaming my wife for the extra usage and costs. Lol
Now an apology is due. I will hear plenty of I told you so.
I got in and out quick enough that it was still worth it. But, the miles were definitely not free….
@ josh- Thanks for the comment. Nice job in getting out early.
To be honest, never really looked at my electric bill that closely.
Did not expect to disparity to be that large. After all, the claim was more competition
better prices..At least now I know how to monitor,
Yep,same story here. I didn’t break it down in this detail, but my bill was approximately $75 before I signed up in 2013, it kept going up, and was $138 last month when I finally canceled. I’m surprised there hasnt been more talk about this on travel blogs… It seems bloggers are quick to point out the “deal” but don’t often highlight this very big downside. Interesting how some bloggers can obsess over the value of a point down to .00005th of a penny but they don’t including any cautions on how this “deal” will cost you money.
@ Erick. Agree More bloggers should expose these types of situations and these type of companies should have compliance regulations
The title of this article should read “Never accept free miles offers from Energy Providers if you don’t check your bill”
People who frequent this site are savvy enough to take advantage of credit card and other offers and are accustomed to reading fine print. Taking 2 years to recognize a 95% increase in your energy COSTS (not usage) is a little silly.
That being said – I got in and out with Energy Plus for 12,500 Mileage Plus points. Total time investment was maybe 1 hour from signing up to calling Con Edison to cancel as soon as I qualified. Total cost for miles was about $10 in increased supply charges.
@Nitzan- thanks for your comment. Good job on not making a mistake. Yes it was silly. When you read the fine print. Did it say you would pay 95% more? And we will hide our fees so you can’tsee that we are screwing you blind? The purpose of this post is to prevent someone else from making same mistake. Please feel free to share with the group if you come across any similar situations.
Nitzan: “how I left 12,500 UA miles on the table”
Isn’t a little silly that as a savvy person like you only getting 12,500 miles instead of the available 25,000 UA offer?
My learning regarding utility companies and service providers: if it is working for you, do not change!!! Yes, you can save some money but the hassle of the unknown is not worth the risk. I tried to switch satellite and internet providers and I always regretted and ended up canceling the change. I would never mess with utility providers where you don’t have a fixed rate per month but a variable rate with rules that only them can understand.
Santastico- Thanks for your comment, and I agree with you. This companies are misleading the consumer in thinking they will save money because now there is competition
To the hated monopoly. To charge 93% more is robbery. There must be
Some compliance requirements that they must follow. The rate should not
Be hidden in your electric bill.
Btw, this should read these.
I think this would still be a good deal to most people if you get out soon enough, usually right after 3 months. Better do the math next time. Good luck on other bonuses!
@ Simon Zx You are correct. Glad you got out early I have been too busy is not an excuse for a company to overcharge the customer. This type of business model is not the best for survival.
Keep in mind that your electricity or gas bill is typically broken down to the cost of the commodity itself (the gas or electricity), the transmission or delivery cost (to get the energy to you), and the administrative costs. Typically with the incumbent energy company, all of these costs are combined into the energy cost expressed as a per kilowatt or therms price.
Just like a mortgage, you can often elect a fixed energy rate or “ride the market” and take a variable rate when you use a competitor energy company. Your incumbent energy provider will usually not offer a fixed rate, as they pass through their energy costs directly to you.
When you go with a competitive energy provider, they can offer options that your incumbent energy provider cannot (fixed rates, hopefully competitive rates). This is where you can hope to save money.
@ mr lee,
Thanks for your comment and education on this topic. Fortunately I only switched electric. If I remember correctly, I was not given a choice for fixed or variable. Even if one chooses variable,should the difference be @ least 60% more.? Over a 12 month period, one would think the switched company would have better rates at least for one month. Maybe this company should Learn how to buy energy at better prices and pass the savings to the customer. Seems to me that they mark up the cost at an excessive rate at the expense of the customer
Every state has different rules and availability. There are no guarantees in these programs but the good competitors usually offer to show past history of their rates vs the incumbent.
Ohio was an early deregulated state and their Public Utility Commission offered an apples to apples comparison of incumbent vs competitor bills. I don’t know which state you are in but see if your PUC offers something similar.
@askmrlee agree on the comparison should be Apple to apple and I would think if a company has a competitive advantage it would be in their best interest and their customers best interest to highlight. These companies should be forced to display their last 12 month rates versus the incumbent, this way the consumer can make an informed decision Thanks again, for sharing your views and information with us
While electric rates have soared over the past 2 years for virtually all energy providers, you indeed got a bad deal. I’m one of the lucky ones that have enjoyed points from my natural gas provider along with super low rates. I monitor energy rates monthly. So far, I’ve done much better with variable than fixed for natural gas for the last decade. Electric is the problem due to recent regulations (thanks Obama) which is hindering electric companies from using more coal which is a very inexpensive way to produce lots of electricity in the Midwest. Electric companies have been raising rates because of the regulations and it’s going to get much worse unless changes occur within the next 18 months.
@ekent thanks for you comment. Glad you did well with gas switch. Unfortunately I only switched electric. I am learning more about energy due to the comments and my research. My expertise is in financial services. Happy travels.
Saw a TPG article on this last month: http://thepointsguy.com/2015/12/energy-plus-miles-promotion/ I was never enticed to begin with, but I figured it went along the same lines as the “Wine Club” offer. Sorry to hear about this! Frankly it seems to me this company should be illegal. From what I can tell, the sole purpose of this companies existence is to scam people into giving them more money for the same service by luring them with Miles and changing the rates on them once their signed up. Unless I’m missing something— they don’t seem to be providing any actual service.
@paul. Thanks for your comment. They must be paying their advertisers good money to be featured with their miles program.