Fixed Rate or Variable Rate: Which Plan is Best for You?

Choosing the right electricity plan can be a confusing process but it doesn’t have to be. You may ask yourself: (1) Should you go with a fixed rate or variable rate? (2) Why do companies offer both?

To help provide some additional information, I’m going to explain the differences between the two most common rate plans: fixed & variable rates.

Fixed Rate

It’s important to understand that electricity market prices constantly fluctuate based on changes in supply and demand, which are affected by a number of factors such as environmental conditions (weather) and updates to regulatory policy. In the grand scheme of things, electricity prices can change. To better illustrate this point, the graphic below shows how volatile the electricity market can be and how a fixed rate works:

Variable Rate

Many companies also offer a rate, in select states only, that provides customers with a market-based price each month. A variable rate may vary from month to month and may at times be either higher or lower than fixed-price options.

It’s worth noting that customers who choose this rate plan usually have a higher risk tolerance and have made a choice to handle price swings throughout the year.

For more information on both fixed and variable rates, visit our website HERE.