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fixed rates and variable rates

What is the Difference Between Variable Rate and Fixed Rate Plans?

by On Dec 27 2016

Figuring out what kind of residential or commercial electricity plan is right for you can be a challenge. The two most common kinds of plans are variable rate plans and fixed rate plans. Do you know which one is best for you? The first step is learning the difference between them.

Variable Rate Plans

 On a variable rate plan, the amount of money you pay per month for electricity will be dependent on the market. In other words, the amount each kilowatt per hour (kWh) costs can rise or fall monthly or even hourly. Factors that influence this variable price of electricity include temperature, weather conditions, and supply and demand. For people who live in extremely hot or cold environments, spikes can occur on your monthly bill due to the fluctuating kilowatts-per-hour costs. Many people can save over a long period with this plan (especially in moderate climates), but it can be more challenging to budget for. The biggest customer incentive for variable rate plans is the fact that these plans rarely require a long-term contract, allowing the consumer to opt out without any penalty.

Fixed Rate Plans

 A fixed rate plan offer just that: a fixed rate for your electricity costs per kilowatt hour. This cost per kWh is generally fixed for between three months or the entire term of your contract. A fixed plan will allow you to budget your energy costs more accurately and see fewer spikes in the price you pay. However, the consumer may sometimes pay more than the market value for electricity. When signing up for a fixed rate plan, it’s always essential to read the fine print and understand what you’re signing up for. Don’t get stuck in a two-year plan that isn’t right for you!

Choosing Your Plan

At Discount Power, we recommend choosing one of our fixed rate plans offered on our website. Our selections are predictable and will allow you to lock in an affordable rate for the duration of your contract. Unlike most other plans, our fixed rate electricity plans always offer the lowest rates possible, without complicated rate calculations.  Learn More