Comparing Electricity Prices: Fixed Rates vs. Variable Rates
The Differences Between Two Types of Electricity Prices
As an energy consumer, you may be empowered to choose your own electricity prices and energy suppliers—if you live in one of the states that have been deregulated. When researching electricity companies and energy suppliers, you may be faced with a few important decisions regarding your energy plan.
One of the decisions you’ll have to make is whether you want to sign up for a fixed-rate plan or a variable-rate plan. Here are some of the key differences between the two pricing structures to help you decide.
Fixed Rates
What is a fixed-rate energy plan?
A fixed-rate energy plan is an all-inclusive pricing plan that locks you in at one set rate per kilowatt hour (kWh) for the length of a contract.
What are the important features of a fixed-rate energy plan?
Fixed-rate energy plans are less standard than the traditional variable rates (to be covered below). As consumers are empowered to select their own plans, fixed-rate plans are becoming more appealing. Some of the key features of these plans include:
- Your energy company makes a commitment to you, offering you the same price for a set period of time.
- Your rate will remain the same, offering you price certainty, predictability, and stability when it comes to your monthly expenses.
- You may have to wait until your contract expires to get a lower price, should the market drop significantly. However, some companies (like Star Energy Partners) may automatically adjust your rate at the end of a smaller term within your contract to provide you with the best service available.
- Your electricity prices won’t fluctuate during extreme weather temperatures or other high-demand periods.
- You may be more likely to have early termination fees. However, some companies offer guaranteed satisfaction and are dropping these fees for your benefit.
Variable Rates
What is a variable-rate energy plan?
A variable-rate energy plan means that your electricity prices are subject to change—increase or decrease—based on the current market.
What are the important features of a variable-rate energy plan?
Variable-rate energy plans are more common than fixed-rate plans and hold some advantages and disadvantages for consumers. Some of the key features of a variable-rate energy plan include:
- Your rates can change by the hour, day, or month—depending on the market.
- Rates tend to be higher during extreme weather temperatures or when demand is high (both of which tend to occur at the same time, as people use more energy during extreme weather to keep their homes comfortable).
- You may be less likely to encounter early termination fees.
- It can be hard to predict your bill each month, making budgeting difficult.
- You could potentially save money if you’re only using energy during off-peak hours when rates are generally lower.
Control your energy spending. Compare electricity prices now!
Star Energy Partners is so much more than just an electricity company. We provide our customers (whom we call partners) with real savings opportunities and easy ways to do something good for the planet every day through renewable energy. Our commitment is to empower you to make your own decisions when it comes to your energy plan. With low fixed rates and no early termination fees, we offer great plans to meet your needs.
