Learn the language of energy plans
From different ways to calculate your rate to different contract lengths, electric plans can vary widely. To find the right electricity plan for your family, you need to understand the language.
Types of supply rates
Choose from a fixed, variable or indexed rate.
- Fixed rate: Fixed-rate energy plans offer a measure of predictability throughout the span of your contract. A fixed rate is exactly that, fixed. It doesn't change even when energy prices fluctuate. With a fixed-rate plan, your per kilowatt hour rate stays the same from the first month of your contract all the way to the last.
- Variable rate: Variable-rate electricity plans may offer savings if energy prices stay low. Variable rate plans adjust according to the current cost of electricity. Seasonal and market fluctuations can affect your rate, though. If demand is high, as is typical during the hot Texas summer, your rate may go up. Alternatively, if demand is low, your variable rate may go down.
- Indexed rate: An indexed rate is similar to a variable rate in that it can change based on market conditions. Indexed rates are tied to an energy index and calculated using a standard formula. The benefit of an indexed rate is that the energy provider can't raise your rate at its own discretion. The drawback is that the energy market can be unpredictable.
Types of energy plans
Decide what type of plan is best for you.
- Prepaid electricity plans: If you don't want to be locked into a contract, prepaid energy plans may be the way to go. With a prepaid electricity plan, you can pay as you go. The electricity company will contact you when your prepaid energy account is running low so you can make another deposit and maintain service. If you choose a prepaid electricity plan, you should be careful to budget your energy consumption. If you exceed your prepaid energy use, your power could be shut off. Prepaid energy plans require careful planning and monitoring. If you're simply looking to have the freedom to switch providers without signing a long-term contract, you may want to look into a month-to-month electricity plan.
- Monthly energy plans: Monthly electric plans make it easy to switch electricity providers on the fly without incurring any penalty for switching before your current contract term expires. However, month-to-month customers may pay for this convenience in the form of a higher rate. Monthly electric plans may be most helpful when you're sampling providers. Once you find a provider you like, it may be more economical to sign a longer-term contract.
- Long-term electric plans: Long-term energy plans run the gamut from a short three or six months to three or even five years. When you sign a long-term contract with a fixed rate, you can enjoy the predictability that comes with knowing your rate won't go up for the duration of the contract. When you lock in your rate for a longer term, you insulate yourself from the ups and downs of the energy market.
Call today to choose your energy plan
Now that you know the difference between electric plan features, rates and terms, you are ready to select the right electricity plan for you. Call ChooseTexasPower.org to get started. Expert agents can help you switch or start new service today.