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855-475-8315The deregulated electricity market in Texas means that you get the freedom to choose your retail electricity provider (REP). It also means you get to select an energy plan that will play a significant role in how much you pay for your electricity usage.
Not sure where to start? That’s where Power Wizard comes in. We’ll help you find the best plans with the most affordable rates based on your unique needs in seconds, helping to save you valuable time and effort.
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When looking for an energy provider, one of the first things you’ll notice is that most offer multiple plan options. Here, we’ll take a closer look at variable-rate plans to help you determine if they might be right for you.
What Is a Variable Rate Electricity Plan?
Fixed-rate energy plans are one of the most well-known and popular plan types in Texas. These plans allow you to lock in a specific cost per kilowatt-hour for a set timeframe. Despite their benefits, they aren’t always the best fit for everyone.
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Variable-rate electricity plans offer an alternative. Instead of paying the same price per kilowatt-hour every month, your cost (as the name suggests) varies. The rate your energy provider charges will change based on market conditions. Generally, when wholesale electricity prices increase, your rate increases. The opposite occurs when wholesale prices decrease. Your rate may also go up or down at the discretion of your energy provider.
The Benefits of Variable Rate Plans
When it comes to electricity plans, no one option is ideal for everyone. The one that’s best for you will depend on your unique situation. Assessing the pros and cons of each plan type can help you determine which energy plan is right for you.
Let’s start with the benefits of a variable rate electricity plan:
Customers Have the Opportunity to Save on Energy Costs
With a fixed-rate plan, you lock in a set price per kilowatt-hour. While that can be beneficial if electricity rates go up, you’ll end up paying more for your electricity if rates start decreasing.
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If you have a variable-rate plan, you’ll get to take advantage of falling electricity prices. As market prices drop, your rates may follow suit. Lower rates mean lower electricity bills every month.
Variable Rates Are Not Subject to Cancellation Fees
While fixed-rate plans allow you to lock in your electricity rate, the catch is that you have to stay with your energy provider for a set period. If you find a plan with a lower rate before the end of your agreed-upon term, your energy provider may charge you a hefty early cancellation or early termination fee. Some charge upwards of several hundred dollars, negating any savings you would have gained by changing plans.
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With a variable-rate plan, there are no early termination fees. If you find another electricity plan with a lower rate from a different energy provider, you can make the switch without having to pay any financial penalties.
Variable Rates Do Not Require a Long-Term Contract
The catch behind fixed-rate plans is that you have to agree to a term of at least three months. Your energy provider agrees to charge you the same rate for electricity every month for the duration of your contract’s term in exchange for you staying with them for that timeframe. Most contracts last a few months to a few years. The cost of breaking your contract is a potentially expensive cancellation fee.
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Variable-rate plans, also aptly called month-to-month plans, don’t require a long-term contract. If there’s any reason you want to change to a new energy provider (you’re unhappy with your current provider’s customer service, or the rates have climbed too high), you can do so at any time. There’s nothing binding you to your current REP. You have much more freedom and flexibility when it comes to your energy plan.
Disadvantages of a Variable Rate Plan
As with any other Texas electricity plan, variable-rate plans also have their drawbacks, too. You’ll want to consider them carefully when deciding which type of plan might be best for your needs.
Cost From Month to Month Isn’t Consistent
The main draw of fixed-rate plans is the main drawback of variable-rate options. Fixed-rate plans feature a set price per kilowatt-hour that, regardless of what happens to the electricity market, won’t change for the duration of your contract. No matter how high prices climb, your rate stays the same. While your bill won’t generally be the same every month, these plans offer more consistency and predictability.
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Variable-rate plans, on the other hand, come with electricity rates that can vary significantly from one month to the next. To make matters worse, any rate changes you see in your plan may occur without your knowledge. Unless you monitor your electricity usage and costs, you won’t know about rate increases until you receive your monthly bill.
That inconsistency can lead to some rather unpleasant surprises at the end of the month. It can also make budgeting more difficult.
No Rate Safeguards
Variable-rate electricity plans have few to no rate safeguards. Your rate can fluctuate significantly from one month to the next. The electricity market isn’t the only factor that plays a role, either. Your energy provider can increase your rates at their discretion within the terms of the contract (even if market prices are falling), and you might get little to no warning.
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For example, your energy provider might start you off with an enticingly low rate for your first few billing cycles. Then seemingly out of the blue, the company could increase your cost per kilowatt-hour. You may have grown comfortable paying the rate you had when you first enrolled in your plan, which can lead to quite the surprise when you get a bill that’s much higher.
While you might not have any rate safeguards with a variable-rate plan, that doesn’t always mean you’ll have inconsistent or exorbitant energy bills each month. Power Wizard can help you find the best energy plans with the most affordable rates for your needs, so you can avoid gimmicky plans and hidden fees.
What Texas Electricity Plan Is For You?
The right electricity plan for you depends on your unique needs. A variable-rate plan might make the most sense if you want to be able to change your plan at any time without having to deal with breaking a contract or paying expensive cancellation fees.
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However, as with any other plan, variable-rate plans aren’t without their drawbacks. Your rates can change month to month based on market conditions. Your energy provider can change your rates at any time, too. If you’re looking for something that provides more predictability, stability, and protection against rate increases, a fixed-rate plan is the better option.
No matter which electricity plan type you’re looking for, Power Wizard can help you find the right one for you. We’ll compare hundreds of Texas power plans and show you the best ones with the low rates. From there, you can compare your top options and choose the one you feel is the best fit. Alternatively, you can sign up for Power Wizard’s VIP membership, and we’ll manage the process for you.
Are you ready to find the best Texas electricity plan for your needs? Visit Power Wizard and get started today.
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