3 Key Differences Between Fixed and Variable Electricity Plans

Buying electricity isn’t what it used to be, is it?

You used to have just a single choice.

Now you can choose from nearly 100 REPs. And, each of those REPs has many different plans to choose from.

On the one hand, you can save money when you choose wisely.

But on the other, you can get burned and actually end up paying more for the same old electricity.

Let’s make sure that last one never happens to you.

Learn the differences between fixed-rate and variable-rate electricity plans:

1. Predictability

Starting with the obvious, fixed-rate electricity plans are predictable. You know pretty closely what you will have to pay each month (costs only change based on your usage).

That makes budgeting easy. It keeps your stress low. You’ll feel happier.

And if you lock in a competitive kWh-rate, you have guaranteed savings for a period of time.

Variable-rate plans, on the other hand, aren’t so predictable.

The costs go up-and-down with the supply and demand in the market.

Remember the skyrocketing electricity prices in February this year?

Texans usually pay an average of 12 cents per kWh during that month. However, those prices shot up to $9 per kWh, with ERCOT and the Texas Public Utility Commission watching the whole time.

Some Texans got energy bills that cost thousands of dollars.

That’s really a once-in-a-lifetime example. But it did happen.

And that’s a potential vulnerability of the variable-rate electricity plans.

2. Savings

Variable-rate electricity plans can result in you scoring some nice energy savings.

As long as the outdoor temperature doesn’t swing to an extreme, you’re likely to save money on these plans.

With a fixed-rate plan, you won’t cash in on the savings during low-demand times.

3. Greater Flexibility in Choosing Your REP

In most cases, variable-rate plans are offered more frequently by REPs.

So, you have the opportunity to talk with more REPs and possibly score yourself a better deal.

You could even present competing REP plans to another REP and attempt to negotiate yourself more favorable terms.

Additionally, variable-rate plans more frequently do not require a contract. That gives you even more freedom to choose your REP.

However, a rare REP does offer a fixed-rate plan without a contract or any early cancellation fees.

It’s difficult, but not impossible, to find.

Well, that’s it. A quick comparison of fixed-rate and variable-rate electricity plans.

Which makes most sense for you?