Graham Griffin
Which is Better: Fixed-Rate or Variable-Rate Electricity?
Those of you who have lived in Texas for more than a year may recall when winter storm Uri hit the state over Valentine’s Day weekend in 2021.
Millions of people in Texas were left without power by a storm that brought freezing temperatures and widespread outages, causing billions of dollars in damage.
Some Texans also paid a high financial price and learned the hard way the importance of having a fixed-rate energy plan in Texas.
Texas residents enrolled in variable-rate electricity plans, such as Griddy (now out of business), had rates increase by as much as an eye-popping 18,000 percent.
These large bills were especially difficult during the recession, which primarily affected low-income Texans.
There were reports of bills as high as $10,000, which could bankrupt households already struggling financially as a result of the pandemic.
Texans with fixed-rate contracts, however, did not have to pay hefty electricity bills. Their fixed-rate contracts protected them from the changing market conditions.
Winter storm Uri highlighted the importance of fixed-rate energy plans in Texas.
Enroll today! Fixed-rate plans are as low as $0.10 per kilowatt-hour (kWh) on ComparePower.
Electricity providers in the state offer both variable-rate plans and fixed-rate plans.
Knowing the differences can help you choose the right plan for your household.
Shopping rates for your business? Get a custom quote here in minutes.
What is a Fixed-Rate Electricity Plan?
Fixed-rate plans are fixed terms, typically 3, 6, 12, 24, or 36 months. You sign a contract with your electricity provider in order to get a fixed rate.
Most Texas households have fixed-rate electricity plans which offer stable, predictable pricing.
You will need to sign and commit to a contract but with that, you pay a fixed rate that does not change or fluctuate with market conditions.
A fixed-rate energy plan does not mean your electric bill will always be the same. You still pay per kilowatt-hour.
The total kilowatt-hours you use, the rate you pay for that energy, and additional fees from the utility will determine your monthly bill.
The Benefits of Fixed-Rate Energy Plans
The benefit of a fixed-rate plan is peace of mind and predictability of your future electricity bills.
The drawback is that you are committed to staying with your electricity company for the remainder of your contract term.
Even if market prices drop you will not be able to take advantage as you’ll be locked in a contract with your provider.
While this may seem like a burden, most Texans enjoy the peace of mind that comes with fixed-rate contracts.
Fixed-Rate Electricity Plans
These live rates for Oncor Electric Delivery service area were updated on . Pricing shown is based on an exact usage of 1000 kWh.
What is a Variable-Rate Electricity Plan?
Variable-rate plans can change with weather and market conditions and are tied to the fluctuating price energy providers pay to buy electricity from power generators.
Variable-rate plans can be enticing because they offer cheaper power when the state’s electricity supply is abundant, but more expensive rates when demand is high.
Some households with variable-rate plans may not even realize they are being billed on a variable rate.
Consumers are often switched to variable-rate plans by retail energy providers when their fixed-rate contracts expire.
Check your electricity bill for your contract end date. If your contract has lapsed it’s time to shop for a new rate.
Learn how electricity contract renewals work in Texas.
Benefits of Variable-Rate Energy Plans
Variable-rate plans do not require a contract, so you are not locked into a long-term commitment.
The disadvantage of a variable rate electricity plan is that the rate can vary from month to month according to market conditions.
Plans with variable rates are best suited to consumers who need electricity on a short-term basis or understand the risks associated with them.
Is a Fixed-Rate or Variable-Rate Plan Right For You?
Although variable-rate plans seem enticing, do your homework before you choose a variable-rate plan over a fixed rate for electricity service.
Variable rates always carry some level of risk. Understanding the risk you’re taking is critical when dealing with variable-rate energy plans.
Our recommendation is to choose a fixed-rate plan to avoid the uncertainty that comes with variable rate plans.
For short-term power needs or if you absolutely do not want to be locked into a contract, choose a variable rate. But be aware that the cost may fluctuate significantly from month to month.
Switching Electricity Rates
Check the expiration date on your electricity bill. If your contract has lapsed, consider switching energy providers, as you could be leaving money on the table.
We’ll show you how to make an informed decision when it comes to choosing the best energy plan for your home.
Learn how to switch energy providers to get a lower rate in Texas.
New Home Electricity Rates
Moving into a new home and need to set up electric service?
The best way to shop for an energy plan in Texas is still by estimating your anticipated monthly usage.
This Online Electricity Usage Calculator will help you estimate your new home’s approximate energy usage so you can make an informed decision.
Green Renewable Electricity Rates
By choosing renewable energy you’re also making a statement to use 100% clean electricity to power your home.
Make a commitment to using clean, renewable energy in your own life with a green electricity rate.
Find the best green energy plans on ComparePower.
Apartment Electricity Rates
Have proof of service for your leasing office or landlord instantly.
You will need an electricity account number prior to moving into your apartment in Texas.
Your landlord or leasing office requires proof of service prior to your move-in date.
Enroll for electric service with ComparePower and have proof of service in a matter of minutes.
Learn how to shop apartment electricity rates.
High Bill? Find a Lower Rate
Is your electricity bill too high? If you’re confused by all the different energy companies and electricity plans in Texas, you’re not alone.
Don’t overpay for electricity when you can put that money in your bank.
Learn how to avoid how electricity bills in Texas.
Fixed & Variable Electricity Rate FAQ
What Causes Variable Electricity Rates to Change?
Variable-rate plans can change with weather and market conditions and are tied to the fluctuating price energy providers pay to buy electricity from power generators.
If I Choose a Variable Rate, will my Electricity Bill Increase?
Variable rates can vary from month to month according to market conditions.
Should the Size of My House/Apartment Influence My Electricity Plan Choice?
Yes, electricity is priced by kilowatt-hour. Larger homes use more energy than smaller ones. When looking for an electricity rate, you need to know how much electricity you use.
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