When choosing a new electricity plan—especially with a renewable energy provider—you’ll often be asked to choose between fixed and variable rates. Understanding how each works can help you save money, reduce risk, and feel confident about your energy decisions.
This guide breaks down the difference between fixed and variable energy rates, and when one might be better than the other.
What Is a Fixed Energy Rate?
A fixed rate means you pay the same price per kilowatt-hour (kWh) throughout your contract term—typically 6, 12, or 24 months. This fixed price covers the electricity supply portion of your bill. Delivery charges from your utility, taxes and fees can still change.
Pros:
- Predictable monthly bills
- Protection from market fluctuations
- Easier budgeting, especially during high-usage seasons
Cons:
- Might miss out on lower market prices if rates drop
- Early termination fees may apply if you leave early
What Is a Variable Energy Rate?
A variable rate can change from one billing period to the next, based on market conditions and the terms in your supplier’s contract.
Pros:
- Potential for savings when market prices drop
- Often no long-term commitment or cancellation fee — but check your contract’s disclosure statement.
Cons:
- Rates can spike unexpectedly—especially during extreme weather
- Harder to predict your monthly costs
Which One Should You Choose?
Choose Fixed If:
- You value budget stability
- You want to avoid surprise rate hikes
- You’re signing up for a long-term sustainable electricity plan
Choose Variable If:
- You’re okay with some risk in exchange for potential savings
- You want a flexible, short-term plan
- You can reduce energy usage during high-rate periods
What About Green Energy Plans?
Both fixed and variable options are available with green energy suppliers. Fixed renewable plans may be priced differently from variable plans, so compare the rate per kWh and contract terms. Variable plans might offer introductory discounts or seasonal benefits but can be more volatile.
Final Thoughts
Whether you go with fixed or variable rates, the key is to understand what you’re signing up for. If you’re switching to a renewable energy provider, look for transparency, customer support, and contract terms that fit your needs.
Not sure what’s best for your home or business? Contact us and we’ll help you compare options tailored to your energy habits and goals.
