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As one of the biggest names in the industry, if you're shopping for an energy supplier in a deregulated market, you're likely to come across Direct Energy.
Direct Energy was founded in Toronto in 1986 but is now a subsidiary of international giant NRG Energy and is based in Houston. The company claims to supply nearly 4 million residential and business customers with electricity, natural gas and home efficiency services. It currently operates as an energy supplier in several deregulated markets across the eastern US and Alberta, Canada.
Deregulated energy markets result when utilities and other energy producers opt to make the energy they generate available on a wholesale energy market. Suppliers buy off the market and resell to you at retail rates. This all happens on paper via contracts and financial transactions -- local utilities still physically generate and deliver energy to people within their geographical footprint, but who those people pay for that energy is now up to them.
We'll help you find the best electricity rates in your area
Direct Energy offers a wide variety of different fixed price contracts for terms as short as month-to-month all the way up to five years. It's also possible to sign up for a green energy plan in which the company will offset up to 100% of your energy consumption with renewable energy certificates that are tied to energy produced by a sustainable source like wind, solar or hydropower.
The company also offers other novel incentives, like plans that include free energy on nights or weekends (or both), or an Amazon Prime subscription.
We'll help you find the best electricity rates in your area
Direct Energy is among the largest and most financially stable of an emerging crop of energy suppliers in deregulated markets, thanks to its ties to NRG.
That said, it has a "D" rating with the Better Business Bureau backed up by dozens of recent one-star reviews, many of which seem to relate to billing issues. We don't place a lot of stock in online reviews, but there seems to be a clear and consistent pattern of problems.
As always, before entering into any agreement, be sure to do your own research and due diligence, and don't be afraid to ask sales representatives what the company has done to address all the problems you've read about online.
Pros and cons of Direct Energy
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What states and provinces does Direct Energy operate in?
Electricity | Alberta (Canada), Connecticut, Delaware, Illinois, Massachusetts, Maryland, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Texas, Washington, D.C. |
Natural Gas | Alberta (Canada), Illinois, Indiana, Maryland, Massachusetts, Michigan, New Jersey, Ohio, Pennsylvania |
Renewable energy | Alberta (Canada), Delaware, Illinois, Massachusetts, Maryland, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Texas, Washington, D.C. |
Direct Energy: Types of plans offered
Fixed-rate plans: Direct Energy offers mostly fixed-rate plans for electricity and natural gas, with up to 100% renewable energy plans also offered in many states. You can choose the contract length you want (up to three years in some markets) and for that period you'll be guaranteed energy at a set rate. At the end of the term, the rate will update to the current market rate if you opt to renew. This could be a good option if you're satisfied with the current cost of energy and don't think it will drop significantly in the near term, or if you just like knowing what you'll be paying for energy each month.
Variable rate plans: Variable rate plans are essentially like paying market rates for energy, with prices that will fluctuate. Direct Energy only offers this option in Alberta and Texas. It could be a good choice if you expect energy prices to go down in the near future.
Bundled plans: Sometimes energy suppliers will bundle electricity and natural gas service in a single plan for additional savings. Direct Energy currently only offers this option in Alberta.
Renewable energy plans: Direct Energy offers "green energy" plans or add-ons supported by "Renewable Energy Certificates that are purchased and retired in an amount sufficient to match your annual consumption."
Direct Energy says the RECs are sourced from "eligible renewable energy resources like biomass, hydro, solar or wind." This means it isn't directly producing renewable energy itself, but rather buying certificates tied to production from green producers to offset the energy its customers use. It's a potential option if you want to support renewable energy development on your monthly bill.
Direct Energy: Types of rates and plans available
Electricity plans
Fixed-rate plan | Fixed-rate plans have a set price per kilowatt-hour of monthly electricity consumption for a certain duration of months | Month-to-month, 9 months, 10 months, 11 months, 12 months, 13 months, 14 months, 15 months, 16 months, 18 months, 24 months, 27 months, 36 months (not all plans available in all markets) |
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Variable rate plan | Rates per kilowatt-hour are based on the fluctuating energy market | Month-to-month in Texas; 1 year or 3 years in Alberta | AB, TX |
Natural gas plans
Fixed-rate plan | Rates per therm are fixed for a certain duration of months. | 4 months, 5 months, 6 months, 9 months, 12 months, 18 months (not all plans available in all markets) | AB, IL, IN, MD, MA, MI, NJ, OH, PA |
Variable rate plan | Rates per therm are based on the fluctuating energy market. | 1 year, 3 year, 5 year | AB |
Renewable energy plans
Simply Green and similar 100% renewable energy plans | Direct Energy purchases renewable energy certificates tied to solar, wind, hydro or biomass-based energy production projects. | Month-to-month, 12 months, 15 months, 18 months, 24 months, 27 months, 36 months, 5 years (not all plans are available in all markets) | AB, DE, IL, MD, MA, NH, NJ, NY, OH, PA, TX, DC |
Bundled plans
Gas and electric dual fuel plan | Fixed- or variable rate plans available with optional renewable energy add-ons | 1 year, 3 years | AB |
Other services offered by Direct Energy
Whole home protection maintenance and repair plans | A la carte options to keep up a home's HVAC, electrical, appliances, plumbing, water and sewer. |
Why it's important to check the fine print
When shopping on Direct Energy's website, each plan includes links to something like "plan documents," "plan details," "terms of service" or the more cryptic "EFL" for electricity facts label. Be sure to actually read the fine print on these documents, including some specific details:
- Average price per kWh.
- Contract duration.
- Contact information.
- Cancellation or early termination fees.
- Electricity usage credits.
- Moving or transfer fees.
- Late payment fees.
- Potential usage penalty charges.
- Auto bill pay discount requirements.
- Time of use rates or escalators.
- Utility delivery charges.
- Renewable energy percentage.
- Renewal terms.
- Utility delivery charges.
Confusion over these items surfaces repeatedly in online reviews and complaints about the company. Being knowledgeable about this information before signing a contract can prevent potential misunderstandings and make you better prepared to advocate for yourself should problems arise.
Bottom line: Is Direct Energy a good choice?
Direct Energy and its parent company NRG likely aren't going anywhere anytime soon. This strong foundation makes them worthy of a closer look as you shop for energy, as it provides leverage for the company to offer several options across multiple markets.
As we all know from living on Earth in 2023, working with larger companies offering attractive terms can frequently be offset by shortcomings in the customer service department. A concerning number of Direct Energy customers report negative experiences online. Be diligent in your research and grill representatives about how they're working to do better.
How do I sign up for Direct Energy?
You can enroll in a Direct Energy plan by entering your ZIP code into the Choose Energy marketplace. Here you can shop and compare Direct Energy to other providers and plans available in your area.
You can enroll in most plans online via chooseenergy.com or through a Choose Energy telephone representative. Choose Energy is a CNET partner site, which (like CNET) is owned by Red Ventures.