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How long should your electricity contract last?

By: Augusta Free Press |

A lot of decisions can go to determining the cost of your power bill. From the appliances that you have within your home to the type of electricity provider that you choose, you are in control of how much you can spend on electricity bills monthly. However, one aspect that can make a huge impact on the monthly costs of your electricity bills would be the type of contract that you enter into with your electricity provider.

In most cases, those who choose to stick to a month to month contract have to come to terms with varying payments. These price swings are often determined by the demand for electricity as well as energy costs. This begs the question, what type of contract will help cut the cost of your electricity down?

Here is a guide on choosing the best contract length:

The Value of Fixed-Rate Plans

Variable rate contracts will typically leave you at the mercy of the energy market. While the vendors are required to avail the historical costs of energy to the customer, there is no telling what your Texas electricity plans will cost over a certain period of time. In some cases, you might pay way more than the first rate you ever paid your electricity at.

On the other hand, a fixed rate contract eliminates these fluctuations in electricity prices. You can pay the same amount as long as the contract is still viable. In deregulated states like Texas, you can shift the length of the contract to best serve your lifestyle and typical usage.

The Perks of Short Term Plans

In most cases, these plans tend to last less than one year with the longest contract being six months long. Such a plan will allow you the flexibility to switch plans often, especially when the market price is lower than what you might currently be paying. The flip side of this choice is that you will have to shop for electricity frequently, once the contract expires.

In some cases, you might spend a lot of time shopping that you actually miss renewing your contract. If this happens, some vendors can move you into their default plans where you might have to pay for your electricity on a month to month basis. While this might not always be bad, it can be a nasty surprise if the electricity market is currently posting high electricity prices.

Long Term Electrical Plans

Long term contracts will allow you to lock in the cost of your electricity bill for a year onwards. In case you can manage to sign the contract in periods where the electricity bill is quite low, you will enjoy this bargain for a long time. As such, you will barely have to struggle in the cold months or the summer heat when prices might fluctuate.

However, the cost of the long term contract in comparison to the short term contract will mainly depend on what the vendor prioritizes. While some vendors will have the latter contracts being cheaper, others will offer more affordable long term contracts.

It Trickles Down To Your Situation

Short term contracts are best suited for people who would love the flexibility of shifting between electricity plans and do not mind having to shop for a plan every once in a while. On the other hand, long term contracts are designed for people who value stability and would love to pay the same price for a long time. However, your choice doesn’t have to be determined by the length of time you will be in your residence. Each state typically has some regulations that help mitigate the concept of electrical companies charging early termination fees to home movers with unexpired contracts.


The ideal contract should help you enjoy electricity at an affordable rate. You should also feel comfortable paying the same amount for the length of the contract. Assess the different electrical costs to ensure you pick the right contract.