How Are Energy Supply Rates Determined?

How Are Energy Supply Rates Determined?

Energy (natural gas and electricity) supply rates fluctuate based on a series of variables
including market conditions, policy changes and changes in the weather. For example, energy supply rates in Chicago tend to spike during periods of severely cold weather. Conversely, during more mild winters, customers experience less drastic energy supply rate fluctuations.

In response to rate fluctuations, many energy supply companies offer a variety of plans to cater to the budgetary needs of different types of customers. These plans can generally be considered referenced as slight variations of: variable-rate plans, fixed-rate plans, and time-of-use plans.

In this blog post, we’ll focus on what sets fixed-rate plans apart from the other types of plans mentioned above.

What is a Fixed-Rate Plan?

Simply put, with a fixed-rate plan, customers are able to ensure that their price per unit of energy will remain the same for the duration of their contract. This means that in colder months, when energy prices may be higher, customers will still pay a consistent fixed rate per unit of energy. By the same token, if energy supply rates go down, fixed rates will stay the same.

Fixed-rate plans differ from more market-susceptible plans such as variable-rate plans. This is because fixed-rate plans protect customers’ energy supply rates from major spikes due to external influences such as market volatility. Without the protection of a fixed-rate plan, customers are forced to contend with the financial impact of rate spikes. In this regard, fixed-rate plans generally allow customers to assume less risk.

One common misconception regarding fixed-rate energy plans; ,however, is the idea that the amount customers see on their bills will be the same every month. While fixed-rate plans do secure the rate per unit of the energy supply itself, they do not exempt customers from regulated utility fees, or administration fees, or usage. This means that with a fixed-rate plan, a customer’s bill will still increase and decrease proportionately to their monthly energy usage.

Is A Fixed-Rate Plan Right For Me?

Fixed-rate energy plans are ideal for customers who prefer to adhere to a consistent budget. On a fixed-rate plan, customers with fairly consistent monthly usage will tend to pay a similar amount for home energy every month. The predictability of a fixed-rate plan is perfect for those with a fixed income who require stability when creating their monthly budget.

Enrolling in Fixed-Rate Plans

Santanna Energy Services is often times a more cost-effective option than buying your energy from your local offers plans that fit your budget and lifestyle without compromising quality. In our Fixed Price Program, you can lock in a low price on natural gas and electricity for 12 months. Our fixed pricing allows you the security of a constant energy price. Start our quick and easy enrollment process today and achieve the fixed-price peace of mind you deserve.

For more details on any of our fixed rate plans, contact Santanna Energy today!