Fixed vs Variable Electricity Rates

The two products in one line each

• Fixed rate: one price per kWh for the whole term (commonly twelve months). It cannot move up, and it cannot move down. Certainty is the product.
• Variable rate: a price that can change month to month — or more often — with market conditions. It can fall, but it can also spike, and it usually will when the market is tightest.

Both apply only to the supply portion of the bill; delivery stays with your utility either way. See what a fixed electricity rate covers.

The teaser-rate trap

The most common consumer complaint in this industry follows one script: an introductory rate that looks unbeatable for two or three months, then rolls to a variable rate that climbs. The bill only shows the damage months later. If you evaluate any supply offer, the first question is not "what's the rate?" but "what does the rate do after the intro period?" — and the second is "what is the early cancellation fee?"

This is why PowerRelief places fixed twelve-month products only, and why the rate and the term are read to you on a recorded verification before anything is authorized. Ask for the post-term rate on any offer, from anyone.

How regulators treat each product

Treatment varies by state, and it has been tightening. In New York, mass-market residential offers must now be fixed-price (or genuinely renewable) and include a written savings guarantee against default service — variable household rates are effectively out. Other markets require standardized disclosure of rate structure, term and cancellation conditions. Your state's public utility commission and official shopping program are the authoritative sources for the rules where you live.

Who each product suits

A fixed rate suits households that want the supply line of their bill to be predictable — which is most households, and especially anyone on budget billing, since the number being averaged stops jumping. A variable rate can suit households able to watch the market closely and leave quickly, but those same households often do better simply returning to default service. A variable rate is a market position; a fixed rate is a household decision.

The comparison that matters

Compare any offer against your utility's current default supply rate — the Price to Compare, Standard Offer Service, Basic Service or Basic Generation Service, depending on your state. Our guide to default supply rates explains how each market's default rate is set and how often it changes. And because offers move, the reliable way to compare is to have the current offers quoted for your specific utility.