What to Look for When Comparing Fixed vs. Variable Electric Rates

Trying to compare a fixed rate electricity contract vs. a variable rate contract is like comparing apples to oranges.  The two are different products that appeal to two different types of consumers.  Before you decide what’s right for you, ask yourself the following questions:

Do you believe energy prices are more likely to go up or go down over the next 12-24 months?

If you think energy prices are more likely to go up, then now is a great time to lock in a fixed rate for the next 12 or 24 months. A variable rate follows the energy market. If energy prices go up, your rate will go up. *Keep in mind that nobody really has the answer as to where the energy market (and energy prices) will be in the future.

Do you mind spending time checking your electricity bill and doing a monthly rate comparison?

If you would rather pick a fixed electric rate and forget it for a year or two, then choosing a fixed rate may be the right choice for you.  If you choose a variable rate, you can analyze your electric rate each month on your utility bill to see if it went up or down.  You can then catch the rate when (or if) it spikes.

If your electric rate shot up, would you mind paying a higher rate for a month or two?

With a variable rate plan, if the energy market spikes your electric rate will shoot up. Of course, you won’t see this reflected until you get your next utility bill, which can be 30 days after the fact. You will then have to stick with the higher rate for another 30 days until you can exit your contract.

Does it give you peace of mind to know that your rates will not change during the course of your contract?

Fixed price electric rates give you the peace of mind of knowing your rates will not go up during the entire course of your contract.

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