Should You Opt For an Energy Rate Lock-in? Read These Points to Help you Decide
Paying your utility bills is probably one of the most dreaded tasks on your list especially if you tend to end up paying more and more each year. The fact is that electricity is not cheap. In fact, costs here have risen steeply, by over 20%, across the nation over a period of about 10 years. If you want to cut down your costs and live within a budget, one of the first things you should look at is your electricity bill. Bring down the costs here and you can make it far easier for yourself and your family to lie within budget. But is this even possible?
Actually, it is in your hands to keep your electricity bills within control and make sure that you do not fall prey to escalations that take place every now and then in the rate. This can be done by taking advantage of the energy rate lock- in.
A quick overview of what it is
As the term indicates, the energy rate lock in allows you to opt for a fixed rate that you pay for your electricity consumption. The rate keeps fluctuating throughout the year and those who have a variable rate plan enjoy the savings when the rates are low but may have to pay up substantially more when the rates zoom upwards. Typically, there is the seasonal demand factor that pushes rates upward and makes your utility bills go through the roof. So, what happens when you go for a rate lock in? You pay a fixed charge irrespective of how the rates are fluctuating at the moment. If you are still not sure if you should opt for an energy rate lock- in, here are a few points that will help you make the right decision.
Why energy rate lock is good?
The first thing in favor of energy rate lock in is that you get to ward off the rate rises that are inevitable. So when your neighbors are paying hiked rates through specific seasons, you continue to enjoy the same rate and thus save a lot of money.
The fact that rates may change create s complications in your budget management because you do not know exactly how much to allocate to utilities payments in a month. Without knowing this, which is a big chunk of your household expense, there is really no way to make a truly efficient and practical budget. Opting for fixed rate with energy rate lock- in allows you to have a clear picture of what your outgo will be in this category so that you can plan ahead with ease.
What you can do to maximize your benefits is to wait until the electricity rates are at their lowest and then opt for a lock- in so that you essentially fix the rates at its minimum. This way, you get to benefit from every little movement upwards. When the rates go really high, you maximize your savings.
A key thing to remember is that during summer months and immediately following these months, the demand for electricity is sky high because everyone is running their cooling systems. When the weather is slightly cooler after summer people tend to start using far less electricity and thus demand falls and supply follows suit. This is the time when rates also dip and touch their lowest mark. Switching to a fixed rate lock in at this point of time is most beneficial to you.
If you are already in an energy rate lock in plan but at a high rate, you may want to switch when the rates are lower. But the lock in typically comes with a specific period over which the rate will prevail. You will have to wait it out until the plan comes to an end before you can switch to a new lock in rate that is lower.
If you are considering moving to lock in rates but your current lock in plan will come to an end during the peak season when rates will be at the highest, just switch to a monthly variable rate plan for those few months. When the summer is over and rates dip, switch back to a lock in rate plan to make the best of the lower costs.
When energy rate lock in may be a disadvantage
Keep in mind that the rate lock- in means you have to pay the same rate that you have agreed upon even if the prices drop. So, if the rates do not go up as much as you expect, you may not make as much of a saving as you think. This could be a major problem if you lock in at a high rate so time it well, if you are going to choose this option.
Now, when you are switching make sure you choose the right plan. Keep in mind that you should time the plan so that it comes to an end right when the rates are likely to be low again so that when you renew you can do so at good rates. That means you should ideally choose an annual plan if you are switching to lock in energy rates right after summer when the rates are lowest. This way, your plan comes to an end the following year, right after summer ends and the rate hikes are at an end too.
Of course, you should also consider switching to solar power as a means to keep your electricity bills low. If you are not completely moving over to renewable, green, clean energy such as solar right now, do think about partially powering your home this way so that you cut down your utilities bills and at the same time, help save the planet too. Remember that you may get to enjoy some rebates and discounts by going green with your power source.