Deregulated energy is a strange thing to wrap your head around. Why can different companies charge different rates for the same product? When it comes down to it, pricing differences correspond with different perks and plan features which can impact your energy costs in a variety of ways.
While it seems like shopping for a plan based purely on advertised pricing would ensure you get the best deal, that's just not always the case. In order to make their energy solutions competitive to consumers, energy providers try all sorts of things to win their business. Before selecting a plan, it's critical for you to understand everything there is to know about your agreement.
If you're new to this process, or just want a quick crash course on what makes certain plans stand out from the pack, glance through this list of key terms and concepts.
What are they? Fixed rates never change during a contract period. For instance, signing up for a 12 month fixed-rate plan means you'll pay the same amount per unit of energy for 12 months.
Are they right for me? If you're interested in protecting your price from the fluctuations of the energy market, a fixed-rate plan is the ideal solution. You won't have to worry about overall market conditions and you'll have a predictable rate for as long as your contract is valid.
What are they? Unlike fixed rates, variable rates are flexible. If the price of energy goes down, so do variable rates. Unfortunately, if energy rates rise, variable rates go up as well.
Are they right for me? Consumers who choose variable rates are generally more comfortable with the energy market. They are OK with the risk associated with price spikes, and they often enjoy the short-term lengths often associated with these plans.
What are they? In a similar set up to variable rates, indexed rates can change from one month to the next, but unlike variable rates indexed rates go up or down relative to the price of another commodity.
Are they right for me? Indexed rates are perfect for consumers who like the idea of their rate following the general pricing trends of the market, but want to hedge their bets a bit.
What are they? Green energy products are plans that support renewable energy initiatives. Whether it involves purchasing renewable energy credits or carbon offsets, these plans allow consumers to make a difference when it comes to their environmental impact.
Are they right for me? If you're concerned about your carbon footprint, or are just interested in supporting further development in the renewable energies field, choosing a green energy product is a great way to show you're serious about it.
What are they? ust like prepaid cell phone services, prepaid energy plans allow you to purchase your energy supply upfront so you'll always know where you stand.
Are they right for me? Prepaid plans are designed for many types of consumers, but they're ideal for energy customers who have poor credit, want to avoid paying a deposit or simply want to the freedom of a contract-free solution.
What are they? Made possible by smart meter technology, time-of-use plans charge consumers a different rate for their energy use depending on what time of day it is. These separate price points are designed in part to encourage conservation during peak usage periods.
Are they right for me? If you live a flexible life and want to make the most of your saving potential, choosing a time-of-use plan might be a great idea for you. By reorganizing your chores and other consumption-heavy activities around the cheapest rate periods, it's possible to save money with a time-of-use plan.