This post was sponsored by albertaenergyproviders.com. I thought it would be a useful article for some readers — I hope it is! And it helps us to do what we do here on Solar Love — bring you top-quality solar news, analysis, and commentary.
Credit: Theophilus Photography / CC BY-NC-ND
In most markets, consumers have a choice of either fixed rate or variable rate pricing. While both options will give you some measure of control over your electricity bill, one will offer more control than the other. Read on to find the option that will best suit your needs.
Fixed Rate Electricity Plans
Fixed rate electricity contracts have terms with a minimum of at least 3 months but could extend to as much 36 months. During the course of the contract, the unit price of electricity will stay the same — with a few exceptions.
The contract length, also called the term, for fixed rate electricity may be 3 months, 6 months, 12 months, 24 months, and in rare cases 36 months. If you select a fixed rate contract, you’ll be locked into the contract for the full duration. Early cancellations will results in penalties. So why would a customer choose a fixed rate if it ties them to one supplier?
As it turns out, the benefits make the commitment worth their while.
Fixed Rate Pros
Price Protection
The primary benefit of fixing your electricity rate is the price protection it offers. The uncertainty of energy prices means that the rate could go up at a moment’s notice. If you believe that the price will go up, the obvious solution is to lock in your rate.
Good For Fixed Budgets
Fixed prices also benefit people on a fixed budget. Some people might struggle to pay their bill if the price of electricity goes up. A fixed rate will give them the assurance that the rate will stay the same throughout the duration of the contract.
Flexible Terms
If you’re wary of signing up for longer terms, you can choose a term of 12 months or less.
Fixed Rate Cons
Higher Rates
If the price of electricity falls, you’ll be stuck paying higher rates until the end of the term. Fixed contracts are a gamble. They’ll protect you if the prices go up, but you’ll pay more when the rates decrease.
Exit Fees
The provider will impose a penalty if you terminate your contract before the term expires.