Variable-rate electricity is the name of a specific type of electricity plan. Similar to variable-rate mortgages and loans, a variable-rate electricity plan is when you don't keep the same electricity rate throughout the duration of your contract. In other words, just because you sign up for an electricity plan at a rate of 12 cents/kWh doesn't mean that you'll always pay 12 cents/kWh every month.
To learn more about variable-rate electricity plans, how they work, and their benefits, keep reading! In addition to teaching you everything you need to know about these types of electricity plans, we'll also look at a good alternative if you prefer a more stable and reliable electricity option.
- What is a Variable Rate Electricity Plan?
- How Does Variable Rate Electricity Work?
- Fixed Vs. Variable Rate Electricity
- Pros and Cons of Variable Rate Electricity Plans
- Is It Better to Use Fixed or Variable Electricity in Texas?
- Who to Turn to For the Best Fixed-Rate Electricity Plans in Texas
What is a Variable Rate Electricity Plan?
As we mentioned above, a variable rate electricity plan is where your electricity rate can fluctuate from month to month. Whether or not your rate goes up or down will depend on the economy, the cost to produce electricity, the weather, and many other factors. While each of these things can also change the cost of fixed-rate electricity, your rate won't change in the middle of a fixed-rate electricity plan. It will, however, change in the middle of a variable-rate contract.
How Does Variable Rate Electricity Work?
As the name implies, variable-rate electricity is where your rate can vary from month to month. For example, let's say you sign up for a variable-rate plan in January at a rate of 10 cents/kWh. However, in the middle of the month, there's a terrible ice storm that shuts down electricity production for a few days. As a result, your electricity rate jumps from 10 cents/kWh to 20 cents. When the storm recedes and production gets back to normal, your rate might return to 10 cents.
With a variable-rate plan, your rate will remain the same until your REP decides to raise their rates because of bad weather, higher energy costs, or other reasons. While this can lead to huge energy savings in the event that your rate plummets, it can also lead to unexpected costs if your rate rises. For that reason, variable-rate electricity plans are kind of like playing the stock market, because you never know what's going to happen.
Because of the potential volatility of variable-rate electricity plans, you often have the option of terminating your contract prematurely. However, this could be accompanied by additional fees, not to mention the hassle of having to find a new plan.
Fixed Vs. Variable Rate Electricity
Aside from variable-rate electricity, the other common type of electricity plan is a fixed-rate one. Fixed-rate electricity plans are the polar opposite of variable-rate plans. Rather than the potential of having your rate rise and fall periodically, a fixed-rate electricity plan stays the same. This means that if you sign up for a plan with a rate of 12 cents/kWh for two years, your base rate won't change for the duration of the contract.
Pros and Cons of Variable Rate Electricity Plans
Pros of Variable Rate Electricity
The main advantage of variable rate electricity is that there's a chance you'll save money. This happens when you sign up for the plan expecting to pay 15 cents/kWh, but an unexpected surplus of energy leads to a reduction in the cost of energy. As a result, your rate plummets and you pay way less than you anticipated for your electricity.
The second advantage of variable-rate electricity plans is that they're more flexible than fixed-rate plans. In many cases, you have the option of choosing a new plan at the end of each month, or of signing up for contracts that are a shorter length than most fixed-rate plans.
Cons of Variable Rate Electricity
While there are several advantages to variable-rate electricity plans, there are just as many disadvantages. The main one being that there's a good chance your rate will increase rather than decrease. This is because of the current economic instability, rising inflation rates, and potential energy shortage looming on the horizon.
Another disadvantage is that you have to look for a new electricity plan on a monthly basis in the event that your rate is too high to afford. Finding a new plan takes time, energy, and could result in hastily choosing the wrong option. On top of that, variable-rate electricity rates are tough to predict and these types of plans have no stability.
Is It Better to Use Fixed or Variable Electricity in Texas?
If you value stability, reliability, and knowing what your electricity bill is going to be each month, then a fixed-rate electricity plan is right for you. If, however, you like the risk-reward aspect of variable-rate electricity plans and the flexibility of choosing a new plan each month, a variable-rate electricity plan is the way to go. If your only concern is saving as much money as possible, contact us at GoodCharlie Energy for the most affordable and reliable electricity rates and plans in Texas.
Who to Turn to For the Best Fixed-Rate Electricity Plans in Texas
If you don't think that variable-rate electricity is right for you, consider a fixed-rate plan from GoodCharlie Energy. We're one of Texas's top retail electric providers in Texas, and we exclusively offer fixed-rate electricity plans. We also like to keep things simple, so we offer three plan options to our customers when they live in one of our service areas.
Reasons to Sign Up With GoodCharlie Energy
In addition to offering competitive rates on our electricity plans, here are a few other reasons to consider enrolling in a plan with GoodCharlie.
- Unmatched Pack Benefits that are geared towards helping your pets stay safe.
- A dedication to making Texas the best place for a dog to live in.
- Outstanding customer service and a handy blog to answer all your pet and electricity questions.
- We're partnered with several of the top animal shelters in Houston and send monthly donations their way.
- Renewable energy options for each of our plans.
To date, we've donated nearly $50,000 to animal shelters and have impacted the lives of more than 300 animals. We're truly a company that cares about more than the bottom line, and we'd love to partner with you. Contact us to make the change to GoodCharlie and start saving money and lives today!
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