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Residential Electric Rates
There are a few things to keep in mind before choosing a residential electric rate. Knowing what to look for and what to look out for will help in choosing an electric rate and company that offers what you will be happy with. Many electric companies will quote a fixed rate that is good for 1 month but they do not disclose what the electric rate will do after the first month. As a general rule the 1 month rates are usually very low and act as a hook to lure new customers in. The problem with these rates is the percentage they go up in price after the first month. Most electric service customers do not renew with a new provider or plan on the 1 month rate until a few months have past. Because most customers do not shop again for an electric rate after locking in to the 1 month rate they end up paying way to much for their electric service as the 1 month rate goes up much higher then they may have anticipated.
Another issue to be aware of are fixed rates that have a fuel factor or are advertised as commodity based. The electric company that advertises their "commodity based" electric rate as a fixed rate is not being very clear on what it is they are offering. What this jargon really means is if fuel costs go up your electric rate price will increase. Many times when fuel prices decrease the rate is not adjusted to go down with commodity prices. This isn't exactly commodity based if it is only adjusted based on how it benefits the electric provider. Also it should not be advertised as a fixed rate since fuel costs change daily. Fuel costs make major price fluctuations on almost a weekly basis. This means your fixed rate you locked into really isn't fixed but will likely be changed just as often as what is known as a variable electric rate. Not all commodity based products are bad but read the terms and conditions of the contract carefully and customer reveiws on these types of electric rate products.
Nov 28, 2008
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