Before choosing an energy rate and plan, it’s important to know that how your options are. Your electricity provider may offer both plans variable-rate plans and fixed-rate plans. But we know how these energy plans work? and which plan helps to better consumption in bills? Determining the better choice from variable and fixed Electricity plans . Before choosing the energy plan we must know all the plans and rates. The average monthly power consumption rate helps to find a suitable plan for our home. Power rate comes with a “kilowatt-hour or kWh” unit, also rate basis of one-kilowatt-hour plans also come with a contract basis of 12 months or 24 months. In some contracts having 60-90 day contracts.
Fixed-rate energy plans:
With this energy plan, the price we pay for kilowatt-hour same for the end of the contract. So even if the market price change, your rate remains the same per kWh, our energy rate won’t be affected. We can pay for the whole contract here, we can use power through the end of the contract without any interruption. This fixed-rate plan is not always the same by month because our monthly usage may be varying depends on our consumption. The fixed rate is always applicable for only kWh.So we pay the extra amount for extra usage for every kWh.So we find average consumption of the power we use for a month, this can be helped for choosing the right plan and escape from the extra charge. The main benefit is that the fixed rate per kWh never changes even the market rate increase and ability to budget around our power costs. This is a more predictable and consistent monthly bill. Even it has some demerits too that is the kWh rate remains same in whole contract even the market rate drops. It includes cancellation fees for cancel any plan before the end of the contract.
With this plan, we can pay the rate for kWh electricity may be determined by the market or other factors considered by the retailer energy supplier. Since the market cost of electricity changes frequently, your costs could too. This can be good while the market rate drop. But the condition of demand of high-cost power in the market, the variable-rate plan could get costly. Variable-rate energy plans can be complicated for monthly plans. if we start with a lower rate per kWh for a monthly plan, after 2 or 3 months the rate increased then the overall rate jumps to high value. So we must think before choosing this plan. We can choose the best plan by know which one is best between fixed and variable rate plans. It provides greater flexibility to switch energy providers. We can save some money when the market price is low. It having some downsides when comparing fixed-rate plans. The rate of power will be very high when the market price is high. Paying more rate per kWh when the market price is high. Here may face some high peek of rate unexpectedly.
Which best variable vs fixed-rate plan is better for our home consumption? Whether can we choose fixed or variable energy depends on how our family using energy. We choose the plan when we consider the price, plan, and service from the provider.