Which one is better, variable rate or fixed rate on electricity.any info?

Question

since our electricity is high this summer season, our energy provider offered us locked rate or fixed rate for 2 years..i want to know if this better compared to our present variable rate which means the price per kwh(kilowatt per hour) changes every month or per season

Answer 1

One way to research your local company is to review your bills for the past few years.  If you have not lived there for long, consider asking neighbors what has happened to their utility rates.  If it has consistently gone up, then a fixed rate may be good.  Consider your use, also.  If you are tolerant of cold you may not use much energy in the winter for home heating and if that is when the company raises rates, you may do better with a flex-rate.  If the rates are high in the Summer and you are not there (travel, or you run very little AC), then you may benefit from flex rates.  With high fuel costs (circa 2008), it is unlikely electricity rates will go down in the future.  Many factors to consider, however some big utilities have "calculators" online that may help your decision.

Answer 2

Fixed rates are always better. The reason the economy has faletred (besides fuel prices) is all the variables going up causing people to defaulton loans. And ultimately, the stock markey dropped as a result. That's a bigger problem then the fuel prices.

Answer 3

VARIABLE  RATE

Answer 4

You need to understand the reason why energy companies offer these fixed rates.

The energy markets cause prices  on the supply side ( where the utilities buy their energy) to fluctuate. To maintain profitability, they need pass on, by means of increased charges to customers, any rise in cost and try to hang on to that increase when the supply cost falls.

By offering you a fixed rate, they are asking you to bet on an overall price increase over the period of the fixed term. They do this by offering you a unit price which is above the lowest price available at the start of the fixed term, and projecting a rise in unit cost over the fixed term. The apparent saving to you, is when the price rises above your fixed rate.

That's OK, but it only holds good if the price increases. If the price falls, then you start to lose out, and if the fall in price continues and you want to pull out of the fixed term, you pay a penalty for leaving the scheme.

You have to decide whether you want to bet on prices rising or falling, and whether in the term of the fixed rate this will benefit you or not. Only you can know which will suit you.

I suppose you could argue that, if you take a fixed term deal, and make drastic cuts in your consumption, you are bound to win. But if you are going to make drastic cuts in your consumption you will still win on a variable rate!

Remember that at the end of the day the utility companies are out to make a profit from you as a customer. It is up to you to decide by how much you want to let them exploit you.