Back to The Power Lab

What You Should Know About Fixed Rate Electricity Plans

By Jeff Cocking

Choosing an energy provider in Texas can be a bit of a confusing process. Not only do you have numerous retail energy providers (REPs) to choose from, but each company can also offer different types of plans.

There is no one-size-fits-all energy plan. What works for your neighbor down the street might not be the  best choice for you. If you’re unsure of where to start, Power Wizard can help. Using your home’s historical energy use, we can help you narrow down your options and make the process of finding the right plan a little easier.

One of the most popular options is a fixed-rate electricity plan. Here, we’ll dive a little deeper into this type of plan to help you determine whether it’s the best solution for you.

What Are Fixed-Rate Electricity Plans?

A fixed-rate electricity plan allows you to lock in a set electricity rate for the duration of the contract you sign. In other words, you pay the same rate per kilowatt-hour (kWh) no matter what happens to electricity prices outside of your plan.

Note: You may have a fixed rate, but that applies only to your electricity usage. You may have additional fees applied to your bill, including taxes, electricity delivery fees, and other charges from your REP. Power Wizard  combs through hundreds of available electricity plans, helping you find fixed-rate plans at the most affordable rates based on your home’s historical energy usage. REPs have the ability to change a fixed-rate plan, but must provide you the option to leave without an ETF.

Let us find you the best plan in seconds and start saving.


Benefits of Fixed-Rate Plans

Fixed-rate electricity plans are one of the most popular options in Texas. Here are some of the top reasons why.

Your Bill Is Unaffected by Market Prices or Market Conditions

Electricity prices can increase significantly during the hot summer months in Texas. That’s because consumers are using their air conditioners (and, therefore, more energy) to keep their homes comfortable. Exceedingly cold winters,  severe storms, and other weather conditions can affect prices, too, as can factors such as the price of fuels, power plant costs, and  wholesale electricity prices.

When you sign a contract for a fixed-rate electricity plan, you secure a specific rate that will not change until the contract ends. No matter how much rates increase, your price per kilowatt-hour won’t change. If you sign a 24-month contract for $0.12 per kilowatt-hour, you’ll pay $0.12 per kilowatt-hour for the next two years, regardless of any price increases that may occur.

There Is More Consistency in Monthly Bills

Now, a fixed-price electricity plan doesn’t mean you pay the same amount every month (that’s a flat-rate plan). As mentioned earlier, the price you pay per kilowatt-hour stays the same. However, if you use more energy in a given month, your bill will be higher. Conversely, you’ll pay less for months when you use less energy.

Even if your bills fluctuate a bit each month, you’ll still have more consistency and predictability than you would with some other plan types. That can help you avoid being caught off guard by unexpected rate hikes and expensive bills you weren’t anticipating.

Let us find you the best plan in seconds and start saving.


You Can Budget Around Your Electric Bill

When your energy bills fluctuate unpredictably every month, budgeting becomes a challenge. An unexpectedly expensive electricity bill can mean you have less money to put toward savings, miscellaneous spending (e.g., dining out, entertainment), and other financial goals.

With the greater predictability of a fixed-rate electricity plan, it becomes easier to create and maintain a budget. You can more accurately judge how much you’ll need to set aside for your energy bill based on how much electricity you use rather than being taken by surprise and having to worry about where you’re going to pull money from to cover your energy costs.

Cons of a Fixed Electricity Plan

Like other electricity plans, fixed-rate options have their benefits as well as drawbacks. Before you decide what type of plan is best for you, you’ll want to look at a few potential disadvantages of selecting a fixed-rate plan.

If Energy Prices Fall, You’re Stuck

Plans with fixed electricity rates require contracts. You stay with your energy provider for a designated amount of time, generally a few months to a few years, and the provider keeps your electricity rate the same for that entire period.

The same benefit of being able to lock in your electricity rate can also be a drawback, though. Your contract might protect you from rate increases, but it also means that you won’t be able to take advantage of decreasing rates. You’ll have to wait until your contract ends before you can change your plan. There are times it is financially beneficial to end a contract early if the market decreases. The Power Wizard team can help you if you need assistance.

Being in a contract also means you’re subject to fees or additional charges your REP may tack onto your fixed electricity bill. If those fees increase, your bill increases, even though your electricity rate stays the same.

The right partner can help you avoid such issues. With Power Wizard, you can feel confident that you’re selecting the right plan for your needs.

You Face Termination Fees If You Cancel During the Contract Term

Although a fixed-rate plan locks you into a contract, that doesn’t necessarily mean you can’t get out of it. However, it’ll likely cost you. Many REPs charge early-termination fees if you decide to cut ties before the  end of your term. Even if you find a better rate that will save you money in the long run, those fees can deter you from switching.

Power Wizard continuously monitors the market, seeking out the most affordable rates possible for our customers. As a VIP member, you can receive notifications if a plan with lower rates comes along that will help you save money. We’ll factor the termination fee for your current contract into your cost savings to help you  decide whether switching plans makes the most sense for you. If you choose, Power Wizard can handle the process for you. We’ll never change your fixed-rate plan without your permission first.

How Do Fixed Plans Differ From Variable-Rate Plans?

Variable-rate plans are a popular alternative to fixed-rate options. Instead of requiring a contract, these plans go month to month. If you find a lower rate with another REP, you can switch plans without having to wait for the end of a term or paying exorbitant early-termination fees.

The downside to variable plans is that you’re subject to rate changes at any time. If something happens that causes a spike in energy prices, you’ll see a significant increase in your electricity rate when your next bill arrives. Surprises like that can be understandably shocking. They can also throw your finances off balance. Although you can move to a different REP, you may find that everyone has higher rates. In essence, you wouldn’t save as much as you might have if you had signed up for a fixed-rate plan at a lower rate earlier.

Let us find you the best plan in seconds and start saving.


When Is Fixed-Rate the Type of Plan for You?

Fixed-rate electricity plans in Texas offer greater predictability every month, helping you avoid unpleasant billing surprises. Although your bill might fluctuate somewhat, you won’t see the same drastic increases that someone on a variable-rate plan might when energy prices climb. If you plan on remaining in your home for a while, choosing this type of plan might make the most sense. It can also help you avoid the time and stress involved with having to switch REPs every time rates go up.

Are you looking for the best fixed-rate electricity plans Texas has to offer? Let Power Wizard help. We’ll take care of searching through countless energy providers and compile a list of the top options based on your unique needs. You can more quickly and easily compare the top plans and choose the one you feel makes the most sense for you. Visit Power Wizard today to get started!

More From the Power Wizard Blog

  • Shop Texas Electricity

    Early termination fees (ETFs): What they are and how they work

    You may encounter different service contracts when choosing an electricity provider. A key feature to consider in an energy service subscription is the timeframe of service contract. The contract can be for an extended period of time for both prepaid or postpaid electricity plans. The ideal length of the contract may depend on where you […]

    View Article
  • Shop Texas Electricity

    Common energy scams to be aware of

    Finding the right energy plan can be challenging. There are numerous electricity providers in Texas’s deregulated energy market, each of which offers several plans. The choice can be overwhelming, especially when comparing all of your options yourself. With Power Wizard, you don’t have to do it alone. We’ll do the hard work of comparing plans […]

    View Article
  • Shop Texas Electricity

    9 Electricity Safety Tips for Your Home

    Keeping your home and your home’s occupants safe from electrical injury is a matter of taking safety precautions. Such as making sure electrical fixtures and components are installed and used properly, being safe around water, and calling an electrician if anything needs to be installed or repaired. Check out these electricity safety tips. What Is […]

    View Article
  • Shop Texas Electricity

    How to compare electricity providers in Texas

    Whether you’re a newcomer to shopping for electricity providers in Texas or are looking to make a switch, the task can be daunting. After all, to get the best deal for your household, you’ll need to compare electricity providers. This process involves comparing price, contract terms, and energy options. Feeling nervous? Don’t! Many online tools, […]

    View Article
  • Shop Texas Electricity

    Variables That Can Affect Texas Electricity Prices

    Just like the costs of gasoline or food, electricity prices are influenced by several economic and environmental factors. In Texas, severe weather, energy regulations, and available supply are among just a few of the variables that influence the price of electricity for residential consumers. Meanwhile, the deregulation of the electricity market in Texas means that […]

    View Article
  • Shop Texas Electricity

    How energy brokers can help you save

    At these difficult times, we are all looking for ways to lower our cost of living and adapt to the changing economy. Electricity plays a critical role in daily living and contributes significantly to our utility expenses. That’s why identifying the ideal energy plan to reduce energy expenses is one of the top priorities. Several […]

    View Article
  • Shop Texas Electricity

    Your guide to understanding the Texas electricity facts label

    One of the top benefits of living in Texas’ deregulated electricity market is having options. Instead of one or two energy providers, you can choose from dozens. Moreover, you can also select from many of the energy plans a retail energy provider offers. Have you heard of the Texas electricity facts label? Don’t worry, we’ll […]

    View Article
  • Shop Texas Electricity

    The Best Energy-Efficient Products for Your Home

    Becoming more energy-efficient at home is not just about cutting back on energy use, though that’s an essential element. Energy efficiency is also about maximizing how you use energy within different spaces. It should be your top concern, whether you’re looking to purchase a new home or searching for ways to revamp your existing abode. […]

    View Article