Fixed vs. Floating Electricity Rates: What’s the Difference?

Jun 22, 2021Blog, Electricity

In Alberta, families and households have many choices when it comes to buying electricity. Today, many consumers buy their services from independent retailers (like us!) who often offer a better deal than the region’s Regulated Rate Option (RRO). Electricity retailers typically provide one of two options: fixed-rate electricity plans charge the same amount per kilowatt-hour (kWh) over a set period, while floating-rate plans charge a variable amount for your electricity which is determined by market conditions.

So, which is the best option for you?

At PowerBill, we proudly offer both fixed AND floating-rate plans, giving our customers the freedom to choose the best electricity plan for their household’s unique needs. No matter which you prefer, you can rely on PowerBill for simple, transparent electricity service provided by Albertans, for Albertans. Read on to learn more about the difference between fixed and floating electricity rates, as well as how PowerBill provides utility services that help you keep it simple.

How We Buy Electricity for Our Customers

Before we (or any other retailer) can sell our customers electricity, we must first buy it from the wholesale electricity market. Alberta’s electricity market is regulated by the Alberta Electric System Operator (AESO), who pools all electricity in Alberta and sells it to RROs and retailers at fair, competitive rates. Once a retailer has purchased electricity, it’s their decision how to charge their customers. At PowerBill, we’re committed to providing the fairness and flexibility our fellow Albertans deserve with both fixed and floating rate plans.

Fixed-Rate Plans: Simple Stability

With a fixed-rate electricity plan, retailers charge their customers the same amount per kWh regardless of the wholesale price. Typically, a retailer will “lock-in” your electricity rate for a set period of time (usually one year or more).

Many consumers like fixed-rate electricity plans because they are stable and predictable. No matter what the current price of electricity is in Alberta, households will pay the same amount per kWh. The only changing factor in their bill is the amount of electricity they use, making it easy to budget and plan without worrying about fluctuating energy costs.

Floating-Rates: Fair Market Value

In contrast, floating-rate plans adjust electricity rates each billing period to reflect the current price of wholesale electricity. When prices rise, so will your cost per kWh for that month. On the same token, however, low wholesale prices mean lower energy costs for consumers, meaning your household can benefit from lower electricity costs when the market is down.

Consumers who favour floating-rate plans want the fairest deal possible for their electricity. While they aren’t as consistent or predictable as fixed plans, they also allow households to save on electricity when market rates are low (and remain low for extended periods).

Which Rate Plan is Best For Me?

Fixed-rate plans offer consistency for consumers and households. No matter what happens in the electricity market, you’ll always know how much you’ll be paying for your power. Especially in large homes that use a lot of energy, fixed-rate plans offer stability and peace of mind that a floating rate lacks.

In contrast, floating-rate plans are flexible, adjusting energy rates to reflect the current electricity market. When energy costs are low, you pay less; it really is that simple! Although the market will fluctuate over time, floating rates remain a good option for consumers who want a fair deal on their electricity and are comfortable with both increases and decreases in costs.

Choosing PowerBill for Floating and Fixed Electricity Plan

Not every energy company is open about how they calculate the cost of their electricity. Regardless of whether they offer fixed or floating rates, some companies will work hidden fees, markups, and other vague charges into their electricity rates. Unlike many of our competitors, PowerBill is committed to keeping it simple by offering transparent fixed and floating electricity rates.

Our floating rate electricity customers pay wholesale cost + $0.01/kWh. This is significantly lower than many other floating-rate plans available in Alberta today.

For customers seeking consistency in their electricity bills, PowerBill now offers fixed-rate plans. Our newest offering allows customers to combine exceptional PowerBill service and simplicity with the stability of a fixed electricity rate, with the added benefit of predictable pricing, no hidden markups, and no cancellation penalties.

Keep It Simple and Save

Whether you want a fixed or floating rate plan, electricity shouldn’t be complicated. At PowerBill, we believe that no Albertan should have to navigate long-term contracts full of hidden charges to get the service they need. With some of the lowest electricity rates available today, no hidden markups, and transparency every step of the way, PowerBill’s commitment to keeping it simple provides customers with clarity, peace of mind, and value in their utility service.

Keeping it simple also means making it easy to switch! Fill out our online signup form and let us do the rest; we’re always ready to help you seamlessly transition from your current provider, and get you started with utility service made for Albertans.

Ready To Get Started?

Sign up now using our online portal, or contact us today to learn more about PowerBill’s utility solutions.