What is the Difference Between Fixed and Variable Energy Rates?

Choosing between energy providers in a deregulated market can be complicated enough without factoring in how fixed vs variable electricity rates can affect your monthly utility bills. Wondering what the difference is between fixed and variable energy rates and which type of plan is right for your business? 5 Digital Energy can help you learn more about fixed-rate plans and variable-rate plans available in your area, so you can get lower rates (and prices) on your energy bills.

Variable vs Fixed Rates: How Do They Affect Electricity Costs?

Utility companies typically offer a wide variety of contracts to customers. These plans all fall under one of two basic categories: variable-rate plans and fixed-rate plans.

About Variable-Rate Electricity Plans

Variable-rate energy plans are energy plans that have rates per kilowatt-hour that fluctuate based on market conditions. That means that energy costs can be quite low when market prices are stable. During times of market volatility, however, energy prices are prone to spikes and higher rates, meaning higher energy bills.

Variable-rate plans are great for businesses with wide variations in seasonal energy usage, such as businesses that are only open for a few months out of the year. For these businesses, it may be cost-effective to enter a variable-rate contract and adjust electricity expenses based on their actual energy consumption.

About Fixed-Rate Electricity Plans

Also known as flat-rate or fixed-price plans, fixed-rate energy plans are energy plans that always have the same rate on electricity prices throughout the duration of your contract. That does not mean that each electricity bill will be the same, as energy usage can fluctuate greatly month over month. What it does mean is that you will always be billed the same rate for each kilowatt-hour.

The primary benefit of a fixed-rate contract is predictability. You always know what each kilowatt-hour will cost you on your monthly bill, so you can easily calculate your budget based on your energy use. That makes flat-rate contracts best for small businesses that do not have a lot of room for variability in their budgets.

Find the Energy Plans That Work for You

You know your business. We know the energy market.

5 Digital Energy is an energy marketplace that lets businesses compare energy suppliers and their energy plans, including different rates on electricity, cancellation fees/early termination fees, and more.

We help businesses all across the United States, including those in:

Understanding the difference between fixed and variable energy rates is crucial for making informed decisions about your business’s utility bills. At 5 Digital Energy, we’re here to help you navigate the complexities of energy pricing so that you can switch plans if it means getting a lower price on your electricity usage. Contact our energy advisors for a free consultation to learn if a fixed or variable-rate plan is best for you.

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