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Phoenix Energy Blog
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I thought I was on a fixed rate - why are my rates changing?


I sat down with a client the other day to review their first bill with Phoenix. They had recently switched to Phoenix, so I went in with the past six months’ worth of bills to show them how they could expect their charges to change after the switch.We poked through the billing history and found something interesting: for the first two months of that history, their rate was fixed. After that, though, their rate changed in each of the next five months. Strange – were we looking at a variable rate or a fixed rate? My client was confused, as they thought they had remembered signing up with their previous company on a fixed. So why were we looking at four months of changing rates? I had a hunch.

  I went back to the office and did a bit more research on the account and found exactly what I thought I might. Yes, they had signed up with the previous company on a fixed rate. For the duration of their 12-month contract, their rate was fixed at the agreed-upon value – nothing fishy there. The month that we began to see the rates change during our meeting was the 13th month of their working with that company – and they hadn’t renewed their contract.

 This is a very common case. But what happened?

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The company was faithful to the 12-month fixed contract. Normally, a company will reach out to a client toward the end of their contract to see if they want to renew or renegotiate. For whatever reason, that didn’t happen in this case – maybe there was no account representative assigned to the client, maybe it fell through the cracks, or maybe they hoped no one on the clients’ end would notice that the contract had expired. Whatever the case was, the result was exactly what happens at the end of a contract: unless action is taken, a client is rolled over from whatever rate structure they had agreed on to a generic variable rate. For example: if you signed up in March 2016 on a 12-month contract with Company X at a fixed rate of $0.11/kWh for your electricity, you will be charged $0.11/kWh for twelve months. But come March 2017, the 13th month, unless you have spoken with Company X to either set a new rate, resign a contract, or cancel their service, your agreement for the fixed rate has expired; they will charge you their variable rate until you do something about it. The client in the example was paying hundreds more per month because they weren’t taking advantage of beneficial pricing structures that ESCos offer.  

It should fall upon the ESCo to call you and let you know where the markets are so you can plan for a new year. You can always find their number on the back of your bill. If they don’t reach out, it could be a sign that they are going to roll you over to a rate and pricing structure that won’t be beneficial to you. Make sure you have a relationship with your energy company! Think about it – if you’re a restaurant, you want to have relationships with all your vendors – you wouldn’t buy your lettuce or chicken from someone who you don’t know. Why treat your energy any differently?

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