The Pros and Cons of Variable-Rate Energy Plans

The Texas electricity market is changing in a big way. Variable-rate plans are becoming more popular, and they’re going to have a huge impact on how Texans shop for energy. Some variable-rate plans offer great features, like the ability to change your plan at any time (or get out of it if you need to), but others might come with high cancellation fees or higher rates when demand is highest. It’s important that Texans know what they’re getting into before signing up for these new types of electricity plans, so we’ve put together this list of pros and cons about variable rates. You have the power to choose the best option for your home, so be sure to take a look at the types of plans available to you.

The Pros of Variable-Rate Energy Plans

1.) Flexibility

Variable-rate plans are almost always month to month, so you can change your plan at any time, giving you the freedom to choose between lower rates in the summer when demand is higher or higher rates in the winter when it’s harder for Texas power plants to generate enough electricity.

2.) No Long-Term Contracts

Variable-rate plans don’t have long-term contracts, meaning that once your plan expires, you’re free to either choose another variable-rate plan or return back to a traditional fixed-rate plan. Everyone likes flexibility! However, make sure you read any contract fully before signing – some providers may require 30 days’ notice before switching away from their variable rate plans.

3.) No Deposit Fees

Some people worry about having to pay a deposit when they’re signing up for an electricity plan. Luckily, these days it’s pretty standard for variable-rate plans to not require any money down.

The Cons of Variable-Rate Energy Plans

1.) Higher Prices When the Power Grid Is Overloaded

There are times when electricity use in Texas goes way up and we need lots of power at once. The Electric Reliability Council of Texas (ERCOT) works hard to ensure stability and reliability on the state’s grid, but sometimes they can’t keep up. During these emergencies, your provider might buy electricity from other sources at whatever price is necessary, even if that price is more than you’re used to paying per kWh.

2.) Unpredictable Rate Hikes

Variable-rate plans are great if you need flexibility and don’t like long-term contracts. But we know that Texans deserve to have more certainty about how much their electricity bill is going to cost them in the long run. That’s why many providers offer “budget rates,” which provide greater price stability by capping how much your rate can vary each month.