Quick Answer
A fixed rate locks the supply price for the term; a variable rate follows the market and can change — sometimes monthly. Fixed buys predictability (often at a small premium); variable is usually cheaper in flat markets but exposes you to spikes. Neither wins universally — the answer depends on the plans available at your address, their complete terms, and your own usage history.[1][2]
In deregulated states you shop competing offers on your state’s official portal (linked below); everywhere else, your utility’s own rate designs — tiered, time-of-use, or flat — are the menu, and the question becomes which of them fits your usage.
How the Two Structures Compare
| Feature | Fixed rate | Variable rate |
|---|---|---|
| What changes | Supply price locked for the term | Supply price follows the market — often changes monthly |
| Predictability | High — budgetable all term | Low — a spike month raises the bill immediately |
| Typical cost | Small premium over the market average | Often cheaper when markets stay flat |
| Term | Usually 6–24 months; early-termination fees are common | Usually month-to-month; exit any time |
| Best fit | Tight budgets, spike-averse households | Households who watch prices and will switch |
Advertised rates in choice states are supply-only — delivery, fixed charges, and taxes ride on top, so always compare total-bill scope.
Where to shop (official, state-run):
- Texas: PowerToChoose.org — the PUCT comparison site; every plan’s Electricity Facts Label shows price, fees, and term side by side[3]
- Pennsylvania: PAPowerSwitch.com — the PA PUC shopping site, with each utility’s Price to Compare as the baseline[4]
- Ohio: EnergyChoice.Ohio.gov — the PUCO’s apples-to-apples supplier comparison[5]
Rates change weekly. Check the live portal for your zip code rather than any published snapshot — including one on this site.
Break-Even Explanation
A fixed-rate plan locks in the supply price for the term. A variable-rate plan changes with the wholesale market. The break-even question is:
What would the variable rate need to average over the next 12 months for the fixed plan to have been worth it?
- If a fixed offer is 9.2¢/kWh and the variable rate averages 11.0¢/kWh over the term, the fixed plan saved 1.8¢ × your annual kWh — $216 a year at 12,000 kWh.
- If the variable rate averages 8.0¢/kWh instead, you overpaid 1.2¢ — $144 a year.
No one can predict wholesale markets. The fixed-rate premium is essentially an insurance premium against price spikes. For scale: EIA’s average U.S. residential price was 18.34¢/kWh in June 2026, all-in (supply plus delivery)[6] — supply-only offers in choice states sit well below that because delivery is billed separately. Compare the total bill, not just the supply rate.
Worked 12-Month Comparison (Illustrative)
Here is a clean, illustrative 12-month comparison — not a real tariff and not a prediction. One household uses the same 900 kWh every month. Plan A is a fixed offer at 14.0¢/kWh all-in. Plan B is a variable offer tracking a representative market pattern.
| Month (illustrative) | Plan A — fixed 14.0¢/kWh all-in | Plan B — variable market track |
|---|---|---|
| Jan | $126 (14.0¢) | $81 (9.0¢) |
| Apr | $126 (14.0¢) | $99 (11.0¢) |
| Jul | $126 (14.0¢) | $171 (19.0¢) |
| Oct | $126 (14.0¢) | $108 (12.0¢) |
| Annual total | $1,512 | $1,485 |
The table shows check-in months; the annual totals cover the full 12 months under each plan. In this illustration, Plan B averages about 13.75¢/kWh, so it finishes $27 ahead.
That $27 edge is the point — and the warning. On 900 kWh/month, every extra 1¢/kWh in any single month adds $9 to that month’s bill, and every extra 3¢/kWh adds $27. One unusually hot August — the kind of month that pushes wholesale markets up sharply — can erase Plan B’s entire annual edge in a single billing cycle. The takeaway is not that variable wins; it is variance. Fixed buys a bill you know all year; variable buys the chance that the market stays calm, and pays the market’s bill when it does not. Run your own usage history through this same shape before you choose.
When Fixed Wins vs. When Variable Wins
Use the comparison above and your own billing history, not the headline rate. In general:
Choose fixed if:
- Your budget needs a known number every month for the term — the fixed premium is insurance you buy once.
- You have no cash buffer for a spike month; a single hot summer can undo months of small savings.
- Your usage peaks in high-price months, so a variable plan would charge you the market at its worst.
- You do not want to watch rates or remember to shop again at renewal.
Choose variable if:
- You can absorb a spike month, and you are comparing in a flat, low-priced stretch of the market.
- You will watch the market and switch when the math flips — re-check the same portal you used to enroll.
- Your usage is steady or low, so one spike month does less damage.
- The fixed offers in front of you carry terms that make the variable option the cleaner exit.
Early-Termination Fees Are Part of the Fixed Price
A fixed rate is only fixed if you stay for the term. In deregulated markets, fixed 6- to 24-month offers typically carry an early-termination fee (ETF) if you cancel before the term ends — a typical industry range is $150–295, and the exact number is always disclosed in the plan’s terms or, in Texas, on its Electricity Facts Label. The fee changes the arithmetic:
- Switching out of a fixed plan mid-term usually means paying the ETF, so calculate the plan as if you will finish the term.
- If you might move or want the flexibility to switch, the ETF is a real cost of the fixed option — one in that range can erase much of the premium you thought you saved.
- Variable plans are usually month-to-month with no ETF, which is their quiet advantage: the exit is free, even when the bill is not.
Ask for the fee in writing before enrolling and keep it with the contract — it belongs in the same folder as the rate card.
Read the Entire Offer
Request the current terms and identify:
| Item | What to verify |
|---|---|
| Provider and service area | Is the offer available for this account and address? |
| Rate structure | Is the price fixed, indexed, time-variable, block-based, or another structure? |
| Term | When does the offer begin and end? |
| Charges | Which supply, delivery, customer, tax, rider, and one-time charges apply? |
| Enrollment and exit | What renewal, cancellation, and notice terms apply? |
| Price changes | What event or formula permits a change, and where is it disclosed? |
Do not compare a supply-only advertised price with the full amount due on a bill. Use the same charge scope when comparing options.
Use Your Own Billing History
Gather at least several prior statements, noting kWh, billing days, rate-plan name, time-of-use periods if applicable, fixed charges, and seasonal differences. Apply each offer’s written rules to that history only if the provider gives enough information to do so.
DOE explains that electricity rate structures may change with energy use, season, or time of day.[2] A plan that looks favorable for one usage pattern may not have the same result for another.
Questions Before Enrolling
Ask the provider or utility:
- Which parts of my bill can this offer change?
- What are all mandatory charges and conditions?
- How, when, and where will a price or term change be disclosed?
- What happens at the end of the term?
- What cancellation, renewal, dispute, and customer-service policies apply?
Save the offer, enrollment confirmation, and contract version. If information is missing or inconsistent, pause before enrolling and contact the regulator or consumer-protection office that oversees service in your area.
