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  • When Are Fixed Rate Energy Contracts A Good Deal?

Paying a fixed rate for natural gas and electricity is a development that is wholly unique in a deregulated energy market such as Ontario’s. In Ontario, we generally enjoy relatively low electricity and gas prices due to a strong industry and a well-organized grid system. But long that will last? Hints of rate increases across the board, so it’s time to ask if Ontario homeowners really can benefit from a fixed-rate contract.

Image Courtesy of FreeDigitalPhotos.net

Image Courtesy of FreeDigitalPhotos.net

Are Fixed Rate Contracts More Expensive?

Generally, in the beginning of a contract they are a bit more expensive as part of an energy marketers promise to fix rates for a period of time. The contract thus carries a little bit of an inherent risk to it, banking on the hope that Ontario energy rates will increase over time.  If rates do increase, the benefits of saving on your energy bill can be quite considerable.

And as Ontario Energy Group Consumer Watch has noted in past weeks, natural gas and electricity rates are slated to go up amid a resources shortage, as reported by Enbridge Gas. While a temporary interim price hike has been made at 140% of previous rates, there continues to be discussion of whether or not that rate will fluctuate over time, and what that will mean for homeowner whom have already suffers through uncharacteristically bad weather conditions.

Do Certain Types of Homeowners Benefit More?

The criteria for benefiting from a fixed rate energy contract will vary from person to person, but there are a set of guidelines that roughly dictate if a fixed rate energy contract is potentially a smart investment.

Do You Earn Enough To Bear Risk?
Without a doubt, signing any energy contract carries the chance of a risk. Ensuring your finances are stable enough to bear the negative aspect of a risk (or to buy your way out of a contract if need be) both ensures you won’t be burned by a bad contract and that you won’t be worrying about more than just your monthly energy bill.

Do You Own Your Home?
This is something that gets a lot of people, and homeowners fail to consider it while energy marketers fail to check sufficiently. If renters, leasers, or co-owners sign an energy contract without express permission from the owner or landlord of the home, they could be putting themselves at considerable risk. In a worst-case scenario, you may be violating the terms of your lease.

Is Your Home Energy Efficient?
This seems unrelated, but is in fact a big factor in the value of a fixed energy contract is how well you’re using the energy that you’re paying for. A fixed rate energy contract alongside an energy efficient home means your heating/cooling and electricity use is very easy to budget for, and low use alongside low rates means you’ll be saving more on it in the long run.

Ontario Energy Group Consumer Watch advises consumers that fixed energy contracts really aren’t for everyone. And despite what critics believe, there are some unique benefits to them. It requires a good deal more budgeting than simply paying your utilities at the end of the month – but the right energy plan can save you a lot of money in the long run.

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