Electricity rates can be fixed, variable, or indexed. A fixed-rate is one that remains the same for the duration of the contract. When people use more electricity, their bill increases. Electric rates for variable-rate plans can increase or decrease depending on the retail price set by your electricity provider. Inflation rates are also subject to change, but they are determined by a formula linked to an index.
The price for kWh at a fixed rate is generally higher than that at a variable or indexed rate. The price of your energy is always known, and you are protected from price fluctuations. The electric rates in Texas jumped 7,400% from around 12 cents per kilowatt-hour (kWh) to $9 per kWh during the February 2021 winter storm.
Residents with variable-rate plans paid huge electric bills during that time. Fix-rate plans protected customers during that time. A fixed-rate price is often preferable when it comes to cooling down in Texas’ sweltering summers.
Plans and Rates for Houston Electricity
1. Fixed Energy rate
Those who own a home or who rent for a long time may find these rates to be more affordable. At the beginning of your contract, you will have a set rate for electricity. Energy prices and rates in Houston will not fluctuate much each month; they will remain the same. Prices are protected and stability is guaranteed, but long-term commitment requirements usually apply.
Even though some contracts are shorter, such as 3 months, some can even be month-to-month; however, others can last as long as 3 years. In this case, you can’t take advantage of the discounted energy if energy prices drop. Fortunately, you will not suffer any adverse effects from spikes in energy prices. As long as your contract is valid, you will be able to establish your plan every month without having to reapply for it.
2. Varying Energy Rates
A floating-rate plan is the polar opposite of a fixed-rate plan. If you are renting an apartment or house for a short time, variable rates are a better alternative to fixed rates. Our customers don’t have to commit to a long-term contract with a variable energy rate, and they can pay for energy according to market prices.
Our customers can then profit from fluctuating markets when price drops occur. Nevertheless, electricity bills spike when energy costs rise. Those who are willing to take a risk can take advantage of this option. If you are willing to take the risk of rising energy prices, you will benefit from decreases in energy rates. There are no cancellation charges with these plans since they are usually month-to-month.
What is the best?
Each plan type has been explained in this article. Everything has hopefully been explained in a clear manner. I’ll summarize everything quickly if you don’t mind. Fixed-rate, Plan prices are steady and predictable so you don’t always have to worry about high price spikes. Saving the most money, in the long run, can still be done if you select the right plan.
In addition to being cost-effective, variable-rate plans are also subject to high price spikes.
In addition to the research and understanding of the electricity market, index-rate plans offer low prices but involve a lot of monitoring and effort.