The energy market is an uncertain place. It may appear that customers and wholesalers are destined to enjoy rock bottom electricity and natural gas prices, only to be blindsided by an unexpected development, such as a refinery accident, trade war, changes in government regulatory policy, or natural disaster. Any one of these can send prices through the roof for weeks or months, and seriously impinge on your household budget.
So how can you ensure that your energy prices won’t be impacted by world developments, so that you can budget for the long term?
One way is to lock in your energy prices with a fixed rate plan.
Thanks to Canada’s deregulated energy market, consumers have the option to choose from a number of energy companies offering energy plans with a variety of pricing structures. One of the most predictable, simple, and secure types of energy plan on the market is the fixed rate plan.
When you sign up for a fixed rate plan, you lock in a single, fixed rate for the duration of the contract (usually 1, 3, or 5 years). With a fixed rate, you are charged the same amount of money for each and every kilowatt-hour (kWh) of electricity or unit of natural gas—usually measured in gigajoules (GJ) or cubic metres (m3)—you use.
If you tend to use a predictable amount of energy each month—keep in mind that consumption tends to vary based upon the season—this makes it extremely easy to budget. If you secure a fixed rate for five years, what you pay this year will be very close to what you pay five years from now. The same certainly can’t be said for a variable rate plan. And it’s this stability that makes fixed rate energy plans such an attractive prospect for many customers.
Fixed rate energy plans insure against unforeseen events.
No matter what happens in the world, what you pay for electricity today will be the same as what you pay tomorrow under a fixed rate plan. In a sense, fixed rate plans are a form of insurance. When you buy such a plan, your rate will likely be a little bit higher than what you would pay with a variable plan. But your fixed rate protects you from unexpected events, much as your home insurance protects you from calamitous events that might otherwise prove financially ruinous.
So, if you’re looking for maximum stability, then a fixed rate electricity or natural gas plan is likely the best choice for you.