The honest guide
How to tell if an electricity supplier is legit (and spot a scam)
If you just got a call, a knock, or a too-good mailer from an electricity "supplier," here's the honest answer up front: most third-party suppliers are licensed, legal companies — not con artists. The real risk usually isn't fraud. It's the contract. And the way you protect yourself is the same whether a company is squeaky-clean or has a record: verify the license, read the terms, and compare the rate to what you already pay.
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Step 1: Is the company even licensed?
Every retail electricity supplier has to be licensed by your state utility commission to operate. That's the first thing to check, and it's free — your commission lists every licensed supplier (links below). A license tells you the company is real and legally allowed to sell you power. It does not tell you the offer is a good deal. Keep those two questions separate: "is this a real company?" and "is this a good offer?" are different, and the answer is often "yes" and "no."
Step 2: The red flags that actually cost you
A licensed supplier can still sell you a plan built to cost more than your utility's default rate. These are the patterns to watch for:
- A teaser rate that "resets." A low intro rate for a few months that converts to a variable rate the supplier sets at will. The conversion date is in the contract — find it before you sign.
- A monthly fee under a low rate. A "$5.99/month" charge can quietly make a cheap-looking per-kWh rate cost more than the default, especially if you don't use much power.
- An early-termination fee on a variable plan. You can't leave without paying, but they can raise your rate whenever they like. If you see both, walk.
- "Your utility sent me." Your utility won't knock to switch your supplier, and a real supplier won't claim to be your utility. Anyone wanting your account number or to "see your bill" is a red flag — that number is often all it takes to switch you without clear consent (that's slamming, and it's illegal).
- Pressure. A good rate is still good tomorrow. Anyone rushing you is the answer: no.
We break each of these down, with the math, in the should-you-shop guide and the Scam Shield.
Do regulators actually do anything? Yes.
There is real oversight here, and it has teeth. After the 2014 "polar vortex," when variable rates spiked, the Pennsylvania Public Utility Commission clawed back millions of dollars in refunds and penalties from suppliers over deceptive marketing and billing. New Jersey's Attorney General has reached multimillion-dollar settlements with suppliers accused of deceptive sales. In 2024–2025, the Illinois Attorney General settled a string of cases against suppliers over enrollment practices. Ohio and Maryland regulators have fined suppliers and, in some cases, revoked their licenses outright. The point isn't that the market is a scam — it's that bad actors get caught, and that you shouldn't wait for a regulator to protect you when checking the contract takes two minutes.
Sources: state Public Utility Commission and Attorney General enforcement records, by state. Use the official links below to check current actions and complaints.
Check a supplier — and file a complaint — in your state
These are the official, commission-run places to verify a supplier's license, compare offers, and file or check complaints. They take no commissions either.
New Jersey
NJ BPU — license lookup & complaints →
the NJ Board of Public Utilities — official offer comparison →
Already signed up and getting that sinking feeling?
Take a breath. Being on a third-party supplier plan is not the same as being scammed, and you're almost certainly not stuck. Two moves:
- Dig out the contract or welcome email and find three things: your rate, your term, and your cancellation window. Many plans let you cancel within the first few days at no cost.
- Compare your rate to your utility's default. If it's competitive, you can stop worrying. If it's not, you can switch back — usually within a billing cycle or two.
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Check my rate — free & privateCommon questions
- Are third-party electricity suppliers a scam?
- Mostly, no — they're licensed, legal companies regulated by your state. The real risk usually isn't fraud; it's the contract: an intro rate that resets to a high variable one, a monthly fee, or an early-termination penalty. That said, regulators in several states have fined suppliers and even revoked licenses over deceptive marketing, so the way to protect yourself is to verify the license, read the terms, and compare the rate to your utility's default before you sign.
- How do I know if an electricity supplier is legit?
- Every supplier has to be licensed by your state utility commission — you can look them up on the commission's site (linked below). Being licensed makes a company real and legal; it doesn't make their offer a good deal. Check three things: is it a fixed rate for the full term, is there a monthly fee, and does it beat your utility's Price to Compare? If a salesperson is rushing you or claims to be from your utility, that's your cue to slow down.
- Someone knocked on my door (or called) about my electric bill — is it real?
- Be skeptical. Your utility will essentially never come to your door to switch your supplier, and a legitimate supplier won't claim to be your utility. Never show anyone your bill or give out your account number — that number is often all it takes to switch you, sometimes without clear consent (it's called slamming, and it's illegal). A real offer will still be there tomorrow, on your state's official comparison site.
- How do I check complaints against an electricity supplier?
- Your state utility commission takes and tracks complaints, and that's where you file one. Find your state's commission in the list below. In Illinois, the Citizens Utility Board and the Commerce Commission also publish independent analyses of supplier pricing.
Public-record summary as of . For general consumer education, not legal advice — verify a supplier's current status with your state regulator.