Understanding Power Plans: Fixed vs Variable Rates
A comprehensive guide to understanding the differences between fixed and variable electricity rates, helping you choose the best option for your needs.
Fixed Rate Plans
Fixed rate plans offer price certainty for a set period:
Key Features
- Price certainty for contract term
- Protection from rate increases
- Easier budgeting
- Often includes sign-up credits
Limitations
- Usually requires fixed term contract
- May have break fees
- Can't benefit from rate decreases
- May have higher initial rates
Variable Rate Plans
Variable rate plans offer flexibility with changing market rates:
Key Features
- No fixed term contract
- Flexibility to switch anytime
- Can benefit from rate decreases
- Often lower rates initially
Limitations
- Rates can increase
- Less price certainty
- Harder to budget
- May miss out on sign-up credits
Fixed vs Variable Comparison
Consider these factors when comparing plans:
- Contract length requirements
- Current market conditions
- Personal risk tolerance
- Budget certainty needs
- Planned length of stay
- Seasonal usage patterns
Choosing the Right Plan
Fixed rates might be better if you:
- Want predictable bills
- Plan to stay long-term
- Prefer price certainty
- Have stable usage patterns
Variable rates might be better if you:
- Want flexibility to switch
- Are planning to move soon
- Can handle price fluctuations
- Want to benefit from market drops
Switching Between Plans
Important considerations when switching:
- Check current contract obligations
- Calculate potential break fees
- Compare total costs including fees
- Consider timing of switch
- Review new contract terms
- Understand notice periods
Common Questions
What happens when my fixed term ends?
When your fixed term ends, you'll typically be moved to a variable rate plan unless you choose to fix your rates again. It's a good time to compare plans and potentially switch providers.
Can I switch from variable to fixed rates?
Yes, you can switch from variable to fixed rates at any time with most providers. There's usually no fee for this change, but you'll need to commit to a fixed term.
Are fixed rates always higher than variable rates?
Not necessarily. While fixed rates might start slightly higher, they protect you from rate increases during the contract term. Variable rates might start lower but could increase over time.
Ready to Choose Your Plan?
Compare fixed and variable rate plans from top NZ power companies.