Learn How to Compare Electricity Prices for Your Business

To adequately compare electricity prices you need to learn a thing or two about electricity. There are limits to what you can compare and a little knowledge in how the energy market works can be of great help. The concept of fixed, variable and indexed rates is quite different, so the story should start with how each of these rates relates to the market.

Learn How to Compare Electricity Prices for Your Business

Dealing with the Suppliers

After the market became deregulated and we were given the opportunity to choose our suppliers, there have been three different ways to define how we pay for the quantities we use. A supplier is not obliged to offer all three, but in this competing market you will find many suppliers that offer more than one option. Variable, indexed and fixed rates each have their strengths and weaknesses, so knowing how to weigh in the benefits of each model is the true way to compare electricity prices.

Variable Rates

Variable rates are basically as good as your energy supplier. As the market price of electricity shifts, your supplier will adjust your rates. A good supplier may make provisions to secure better rates and protect you from sharp price increases, but nothing is guaranteed.  Keeping variable rates is only good if you are waiting for the right moment to sign a longer contract. Comparing how much you pay with variable rates is only possible once you get the bill. Find last year's bill from the same month and you can get a good sense of the price you are currently paying.

Fixed Rates

Fixed rates offer security in a fluctuating market. When you sing a fixed contract you actually purchase electricity in advance. A typical fixed rate contract signed for one year, reserves as much electricity as you spent in the year before. This makes comparing electricity prices quite easy. Simply calculate everything you paid in the previous year and then compare it with the reserved quantity multiplied by the rate you are currently using.

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Indexed Rates

Playing with indexed rates involves a great deal of uncertainty. Comparing electricity prices is virtually impossible when it comes to indexed rates, as your bull is entirely dependent on the spot market index pricing. This means that the rates fluctuate with the market and without any control from the supplier. This carries with it a great deal of risk if the energy prices skyrocket. You can compare electricity prices with indeed rates only month by month. Same as with the variable find the bill from the same period last year and simply compare the two.

Not All Has to be Indexed

Some companies offer deals where a portion of the expenses are fixed while other are indexed. This is a more secure option for a business as a great deal of the expenses can be calculated and anticipated. Still, this option is dependent on the market and should be viewed as a temporary solution.

Let Luminext Compare Electricity Prices for You

Letting Luminext compare and choose for you is a wise move. Luminext brokers have access to better rates to begin with, so whatever they choose will result in lower bills. In addition, our advanced knowledge in how the market works makes us better at predicting its tendencies. Our deals are not only good today, but throughout the whole length of the contract. Contact us today and receive a free assessment of your electricity rates.

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