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Electricity Plans: Understanding Your Options

Written By: Adam Cain

Last Updated: 01/24/2024

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If you live in an area with Energy Choice, you benefit from the ability to compare electricity plans and switch to the best one for your home. However with so many options available, comparing electricity rate and plan options can be overwhelming – especially if it's your first time.

This guide will walk you through the different types of electricity plans. It also includes tips and all of the information you'll need to make a confident choice when comparing plans.

Fixed, Variable and Indexed Electricity Rates – What's the Difference?

There are three primary types of electricity plans, with the difference being how the rate is structured.

Fixed-Rate Plans

Fixed-rate electricity plans allow you to lock in your rate for the length of the contract. This is the most popular type of plan for customers participating in Energy Choice and the one that you’ll see the most in the Marketplace.

Benefits of fixed-rate electricity plans:

  • Locking in a fixed-rate for the length of your electricity contract
  • Making your electricity bill more predictable every month
  • Price protection from rate increases and energy market fluctuations

Variable Rate Plans

With these plans, the cost changes month to month depending on the cost of wholesale electricity. It's an option for those not ready to commit to a long-term plan.

Benefits of variable-rate electricity plans:

  • Flexibility to switch providers or plans at any time
  • Typically don't require a contract or early cancellation fees

Indexed Electricity Rates

Indexed plans link the price you pay for electricity with a variable, such as the going rate for natural gas. This plan is for savvy consumers who appreciate monitoring pricing for the best deal at the moment. The freedom to choose is enticing but beware of sudden price spikes.

Benefits of indexed electricity plans:

  • Pricing that may outperform fixed-rate plans over time
  • More control over the price that you pay every month
  • Ability to speculate on future electricity prices

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What's the best type of electricity plan for me?

The best type of electricity plan for you depends on numerous factors. These include where your home is located, how much electricity you use every month and how important getting a predictable electricity bill every month is to you.

For Energy Choice customers, fixed-rate electricity plans often bring more benefits than variable or indexed options when switching electricity providers.

This is because you can lock in a low rate and pay the same amount for the electricity that you use every month. You'll never have to worry about huge spikes in your bill or overspending against your monthly budget.

Green Energy and Other Plan Options

In addition to different rate structures, can also choose energy plans with various benefits including 100% green power, plans with incentives and more. Here are some of the different options that you can choose:

100% Renewable Electricity Plans

Signing up for a 100% renewable electricity plan helps promote the generation of green energy by offsetting your usage with renewable energy credits.

Electricity Plans with Incentives

Some electricity companies will bundle incentives along with their electricity plans that help customers take even more control over their energy usage and efficiency. These incentives can include things like smart-home devices and complimentary energy scorecard reports.

Time of Use or Free Nights & Weekend Plans

These electricity plans offer discounts and free usage based on certain times or days of the week. These are favorable if you tend to use more electricity on weekends or specific times that coincide with the electricity company's offer for free usage.

No Deposit Electricity Plans (Texas Customers)

Enrolling in electricity plans may require a deposit if you're in Texas and have low credit scores. No-deposit electricity plans let customers pay in advance for electricity each month, requiring no upfront deposit.

How Long Should I Sign Up For?

Fixed-rate electricity plans come in term-lengths varying from six months to three years. The best length for you depends on how long you'd like to lock in your rate.

If you own your home and don't want to worry about your electricity rates for a while – a longer-term plan (24 or 36 months) may be best. If you're moving soon or aren't sure that you're ready for a long-term contract, a short-term plan (6-12 months) may be the way to go.

Electricity Terms of Service

All electricity plans come with terms of service, or a terms and conditions document outlining the energy rate that you'll pay and other important information.

If you have the power to choose in Texas, you can also refer to the Electricity Facts Label (EFL) that outlines the average energy prices for various usage levels.

How to Compare Electricity Rates

Comparing electricity plans is fast, simple and free on To get started, enter your ZIP Code at the top of the page to see all plans in your area.

  • Electricity Rate: What is the best rate available?
  • Contract Length: How long do I want to lock in a rate for?
  • 100% Renewable Options: Do I care about energy from 100% renewable sources?
  • Plan Incentives: Are there any options that come with smart-home devices or other incentives I may want?

After you choose the best plan for you, click "select" and fill out the necessary information to make the switch. This will only take a few minutes and then your new provider then takes care of the rest.

Your new plan will start in one to two months, all while your local utility company provides the same reliable electricity transmission and distribution.