Fixed vs. Variable Rates

Why the “lowest” rate might not save you money on your electric and gas bills.

What is a fixed rate product?

With a fixed rate product, the price you pay per kWh remains the same for the entire term of the contract, regardless of what happens in the market.

What is a variable rate product?

With a variable rate product, the price you pay per kWh fluctuates monthly. There are many types of variable rates. Below are the most common for small commercial customers:

  1. Price-to-Compare (PTC) – This is the standard utility rate offer for electricity. This rate is set monthly and changes through a process dictated by Ohio’s regulators, the Public Utilities Commission of Ohio (PUCO). These rates are historically higher when demand is higher, such as electric rates in the summer months when customers are running air conditioning.
  2. Standard Choice Offer (SCO) or Monthly Variable Rate (MVR) – This is the standard utility rate offer for natural gas. These rates can be set in different ways depending on your utility region. However, these rates have also historically been higher when demand is high, such as in the winter months when customers are running gas heating.
  3. Supplier Variable Rate – This is an offer from a Certified Retail Electric or Natural Gas Supplier. These rates are often offered through door to door or telemarketing. When compared to fixed offers, they often appear to be much “lower”, but in reality, they can be far costlier as the rates tend to increase in the long term.

Why chose a fixed rate product?

The uncertainty of a variable rate makes it difficult to budget monthly expenses. In addition, it offers price protection from market swings, seasonal demand spikes, and suppliers overcharging.

How do the Community Energy Advisors ensure I am paying the best fixed rate?

As an objective third party consultant, CEA advisors review available market rates and evaluate contracts to only offer the best. We also offer multiple term options to meet your business’s specific needs. Additionally, the program provides contract management to ensure you are renewed at the best market rate and avoid costly variable rates.

To learn more about our fixed rate plans and to lock in your rate today, email info@ceateam.com