When you’re selecting an electricity plan, you may have a choice between fixed-rate and variable rate plans. Fixed-rate means you lock in a per-kilowatt-hour price for electricity for the duration of your contract, ranging from three months to three years. Fixed-rate plans protect you from seasonal and yearly variations in the per-unit price of electricity.
Alternatively, with variable-rate plans, the per-unit cost of electricity fluctuates month to month. These plans may have a lower initial price but they can rise, sometimes sharply, in subsequent months. The good news is that variable-rate plans generally work on a month-to-month basis, so you won’t be locked into a contract.