Everything on Electricity Plan Types from Rates to Billing
When it comes to energy plans, the primary differences in contracts lay in the duration of the agreement, products, rates and billing. You’ll choose the length of your contract when you first sign up for your electricity plan. At this time, you can also decide whether or not you’d like to opt for a green energy plan. Along with the duration of your agreement and type of energy, you’ll decide on your rates and billing method.
Is the price right? Learn about rate plans: fixed, variable, indexed and prepaid
The energy industry is tumultuous and that’s because there are a number of factors that influence demand for electricity. Demand might be affected by weather patterns – extreme cold or hot temperatures generally inspire Texans to turn up their heat or air conditioning. Other factors include supply, since any stalls in the flow of electricity can impact energy prices. In addition, the type of fuel used to generate electricity affects its cost. Coal, oil and other fossil fuels are typically fairly cheap production resources, whereas sometimes green energy production is slightly more expensive.
When you sign up for an energy plan with a variable rate, your monthly rates for electricity might fluctuate. Variable rates are set by your electricity retailer and are based on how much it costs to produce and transport energy. If demand is high, you ’ll be paying a higher rate for energy. Conversely, if demand is low, your bill might be lower.
Fixed rates allow customers to escape the emotional roller coaster of industry rates. At the beginning of your contract, you’ll lock in your rate for electricity. This rate is then fixed for the duration of your contract. With this type of energy plan, customers are immune from price spikes. An additional benefit of a fixed rate is that households and businesses can more easily predict their energy bills. Since they already know their rate for electricity supply, they can plan their monthly budget accordingly.
Indexed rates, similar to variable ones, fluctuate according to market price. However, while rates under variable plans are chosen by your electricity provider, an indexed rate is set by a special formula used by the company.
A prepaid rate works much like a debit card. Customers deposit a certain amount of money into their energy account and then that amount is slowly depleted along with their energy usage. Generally the electricity retailer will notify clients when their balance is low and requires an additional deposit.
Make life a little easier with special billing options
In addition to unique rates, retail electric providers also offer customers billing options. Taking your energy usage into account, choose the billing method that best suits your lifestyle and finances. When you choose time-of-use billing, for example, your price per unit of electricity will vary according to what time of day it was used. If you use electricity at night, when energy demand is lower, you’ll be charged a lower rate. When you select this option, be sure to run your dishwasher overnight instead of during the day when air conditioning is running its hardest and you could spend less for the power you use. Take a look at your own financial situation and determine what type of rate and billing options appeal to you the most. While you’re shopping for your ideal electricity provider, determine whether or not the company offers those types of energy plans. Since electricity is such an important part of day-to-day life in Texas, it’s wise to take the time to find the best energy plan for your home or business.