Learn / Rate types
Learn · 02
Fixed vs. variable vs. index rates for businesses
Texas guide: Three ways to buy electricity for a business, and three different answers to one question: who carries the risk when the market moves?
First: what's actually being priced
When you pick a product, you're choosing how the energy part of your bill is priced. Your utility's delivery charges, grid fees and taxes still pass through on top, whichever product you choose. Keep that in mind when two quotes look far apart. Ask what's included.
Side by side
| Type | How the price is set | Budgeting | Main risk | Usually fits |
|---|---|---|---|---|
| Fixed | Locked per kWh for the contract term | Predictable | You don't benefit if market prices fall. Leaving early can cost a fee. | Most small and mid-size businesses |
| Variable | Set by the supplier, can change monthly | Hard to predict | Rates can rise with little warning. Often higher than contracted rates. | Short gaps, like a move or a closing location |
| Index | Follows the wholesale market plus an agreed margin | Unpredictable | Price spikes when the grid is stressed, like heat waves and freezes | Larger users who can shift load and absorb a bad month |
Fixed
Your energy price per kWh stays the same for the whole term. Your bill still moves with usage and pass-through charges, but the part you shopped doesn't. That's why it's the default for most businesses that just want to plan.
Ask what "fixed" covers
Some fixed products bundle more of the bill into the rate. Others fix only the energy and pass the rest through. Neither is wrong. Just know which one you're comparing. Also check the term length, what happens at the end, and the early termination terms.
Variable
No long commitment, and the supplier can change the price each month. The catch: many businesses don't choose variable on purpose. They land there when a contract ends and nobody signs a renewal. If your bill says "month-to-month," that's probably you. See when to shop your renewal.
Index
Your price is tied to the wholesale market, plus an agreed margin. In calm stretches that can look great. When demand spikes, during extreme heat or a hard freeze, wholesale prices can climb fast, and your bill follows.
Index can make sense for a business with real flexibility: it can shift heavy usage to off-peak hours, it watches its numbers closely, and one ugly month won't sink it. Some suppliers offer blends that fix part of your usage and index the rest. If index is a real candidate for you, we'll talk through the risk in plain terms before you decide.
How to choose
- Could you absorb a very expensive month? If not, lean fixed.
- How long will you be at this location? Match the term to your lease or plans so you aren't paying to leave early.
- Can you move when you use power? If you can't, index's upside mostly goes away.
- When does your current contract end? A new fixed contract can be set to start that day.
Spotting a teaser rate
A very short term with a striking price. A rate quoted without saying what's included. A verbal promise that renewal will be "the same rate." A contract that quietly rolls onto variable pricing at the end. Ask for the all-in picture and the end-of-term terms in writing.
Not sure which fits?
Send your bill and tell us how you like to budget. We'll price the options that make sense for your usage and explain the trade-offs in plain language.