Fixed vs Variable Commercial
Rates
Which is right for your
Business?
A fixed rate, as the name suggests,
means that the per-unit cost of Commercial energy will not
change for the duration of the contract term. There are a few exceptions to this rule, but for the most part a
fixed rate will keep your energy costs consistent, provided your business doesn't vary much in its energy usage.
With a variable rate, the price per unit of electricity fluctuates based on market conditions. A variable
rate will at times yield lower prices, and at times will be priced higher than a fixed rate.
So, how can you decide whether a fixed or variable electricity
rate is right for you? Generally, a fixed rate is the best option if your business will be entering a long term
contract. This is because over time, energy prices will rise according to the cost of inflation. However, your per
unit electricity cost will not increase for the life of the contract. In practical terms, this means that you will
be paying less than market rate for your commercial energy as the contract progresses. On the other hand, if market
rates drop, you may be locked into a long term contract and unable to renegotiate at a lower fixed
rate.
If you are considering a shorter term contract, a variable rate
may be the way to go. While pricing can be somewhat unsteady, you are likely to get lower prices in the short term
than you would with a fixed rate electricity contract. Plus, this allows you the flexibility to enter into a long
term contract in the event that electric prices take a drop that warrants locking in a fixed rate. You can call or
email me to discuss your current situation.
I can get you a quote on any business that is using a minimum of 5000 Kwh per month for a
fixed or variable commercial rate generally in 5 to 7 days.
Call or email me
I will then be able to submit to Viridian Energy for a formal quote specific to your
business.
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