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Does a Long-Term Electricity Plan Protect You from Rising Rates?

December 17, 2020
by dmirza
long-term electricity plan vs short-term electricity plan text

If you are yet again facing the dilemma of which energy plan to choose: fixed-rate, variable-pricing, short-term or long-term electricity plan, consider the future rising costs.

Although the Texas power grid is reliable, the energy rates depend on supply and demand, like any other market. And as an electricity consumer, you may have seen price spikes every summer.

But by choosing long-term fixed-rate electricity plans, many Texans are free of the sudden rate hike.

Are Texas Electricity Rates Rising?

The Texas electric grid ERCOT (Electric Reliability Council of Texas) predicts that power demand will continue at a rate of around 1.5% until 2025.

The Capacity, Demand, and Reserves Report’s outlook is favorable as the ERCOT’s reserve margin stays above 13.75%, which is its target.

Even as the government grants licenses to new power plants to keep up with the electric load increase, usage consumption will peak in summers.

Therefore, consumers must get a stable-rate long-term electricity plan.

Why Choose a Long-Term Electricity Plan?

The answer to whether long-term, fixed-rate electricity plans are better than their variable-rate, no-contract counteracts is a simple “it depends.”

However, you cannot ignore the two primary benefits of a long-term electricity plan:

Consumers can lock-in the electricity rate for an extended period of three to five years and stop worrying about shocking monthly bills.

You can do away with the pricing roller coaster as you shop for better prices less often. You don’t even have to bother about renewing your plan for a very long time.

How to Shop for Guaranteed Energy Prices?

A long-term plan offers prices based on demand and supply forecast for the said period. Electric providers also take into account the historical data while creating plans with forward price curves.

3-year and 5-year plans may have lower kWh rates than a 12-month contract. Then, they are backward dated. So, you can see that the longer the contract length, the cheaper you will get the rates.

Shop for the best fixed-rate electricity plans using these tips:

Be Extremely Cautious: Choose a trustworthy supplier before signing up for a long-term contract. Read reviews or ask friends for recommendations and check if the REP has unresolved consumer complaints.

Compare Energy Plans: Although choosing a constant-price plan is viable in the longer duration, they come with high cancelation fees if you decide to terminate them early. Read the EFL of each plan before you make a decision.

Research Other Options: Consider your living situation – if you plan to move soon, a long-term electricity plan might not be the right choice for you. You may do well with a month-to-month or prepaid energy plan. You can also browse various free electricity plans that need no initial deposit.

Secure the best kWh rates with a long-term plan and protect yourself against energy market fluctuations. Enter your Zip code here and compare electricity plans and rates.

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