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Electricity is a major household expense, and in deregulated markets like Texas, you have the power to choose your provider. That choice often comes down to two plan types: fixed or variable rates.
Fixed-rate plans offer stability, while variable-rate plans can bring flexibility and risk. The right option ultimately depends on your budget, lifestyle, and tolerance for price swings.
This guide explains how each plan works, its pros and cons, and what to consider in the fixed rate vs. variable rate electricity debate.
Fixed vs. Variable: Side-by-Side Comparison
When you’re weighing electricity plans, it often helps to see the differences clearly laid out. Fixed and variable rates each come with trade-offs, and the best fit depends on your priorities.
| Fixed Rate | Variable Rate | |
| Price Stability | Your cost per kWh stays the same throughout your contract. This makes monthly bills more predictable. | Your rate changes with the market, so bills can be lower some months and higher in others. |
| Risk Exposure to Market Spikes | Insulated from sudden jumps in wholesale prices, even during extreme weather or peak demand. | Consumers absorb the impact of market volatility, which can mean sudden double-digit increases. |
| Contract Terms and Early-Termination Fees | Contracts typically run 12 to 36 months. Leaving early often triggers an ETF of around $150 to $200. | Month-to-month agreements with no ETF, though some plans may include higher base charges. |
| Ideal Customer Profiles | Best for homeowners, families, or long-term renters who prefer consistency. | Suits short-term renters or consumers willing to accept risk for potential savings. |
Texas Legislation on Energy Pricing
After the 2021 winter storm, Texas lawmakers changed how electricity plans are sold. One major bill, HB 16, banned retail providers from offering “wholesale indexed” plans to residential customers. These plans tied rates directly to the wholesale market, which could swing wildly during extreme weather and leave households facing sudden, unaffordable bills.
Environmental Options (Green Energy)
Some providers, including Just Energy, offer green energy options for fixed plans. This allows customers to lock in their rate while supporting 100% renewable energy.
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What Is a Fixed-Rate Electricity Plan?
One of the most common choices in deregulated markets is a fixed-rate plan. With this option, the price you pay per kilowatt-hour (kWh) stays the same for the length of your contract, usually 12 to 36 months.
Benefits of Fixed-Rate Electricity Plans
Fixed rates make it easier to plan your monthly budget because of energy price stability—your energy price doesn’t change, even when wholesale prices spike.
Other advantages include:
- Stability: Bills stay consistent, regardless of market volatility.
- Peace of mind: No need to monitor rates each month.
- Flexibility in options: Providers like Just Energy offer fixed contracts with renewable energy add-ons.
This predictability is especially valuable for families, retirees on a fixed income, and anyone who prefers steady monthly expenses.
Drawbacks of Fixed-Rate Electricity Plans
The trade-off for stability is less flexibility. If market prices fall, you’ll still pay the higher locked-in rate until your contract ends. Many fixed plans also include early termination fees (ETFs), which typically range from $150 to $200 if you cancel before your term is up.
A fixed-rate plan may not be the cheapest option in every market, but for many households it provides important protection against sudden price swings.
What Is a Variable-Rate Electricity Plan?
Another option available in deregulated markets is a variable-rate plan. Unlike fixed rates, the price you pay per kilowatt-hour (kWh) changes from month to month, depending on wholesale energy costs and seasonal demand.
How the Rate Is Set Each Month
Your rate isn’t locked in and it adjusts regularly, often based on:
- Wholesale energy market prices that fluctuate daily.
- Seasonal demand, such as higher summer usage in Texas.
- Provider costs and other market factors.
Because of these variables, your monthly bill can rise or fall significantly, sometimes with little notice.
Pros and Cons of Variable-Rate Electricity for Consumers
Variable-rate plans come with trade-offs.
Pros
- Flexibility: Most plans are month-to-month with no long-term commitment.
- No early termination fee (ETF): Easier to switch providers if you find a better deal.
- Good for short-term renters: Ideal if you don’t want a long contract.
Cons
- Unpredictable bills: Rates can spike sharply during peak demand.
- Higher risk: Market volatility is passed directly to consumers.
- Potential for higher long-term costs: While you may benefit when prices dip, extended price increases can outweigh those savings.
A variable-rate plan works best for customers who value flexibility and are comfortable with risk. For households that prefer stability, however, it can introduce too much uncertainty into monthly budgets.
Fixed Rate vs. Variable Rate Real-World Example: Two Bills During a Price Spike
During Winter Storm Uri in February 2021, wholesale electricity prices in Texas surged to the maximum cap of $9,000 per megawatt-hour, up from a typical range of about $30. Some residential customers on wholesale-indexed plans saw massive bills.
One customer, for example, was charged more than $7,000 for just a few days of electricity. Up to that point, the most her family had paid for electricity was $150, which was pretty close to the Texas average of $166.
Another homeowner, Lisa Khoury, was billed approximately $9,340 for just one week of electricity. She typically paid between $200 and $250 per month, which means her storm bill was nearly 40 times higher than normal.
This example highlights how fixed-rate plans shield customers from extreme price volatility, while wholesale-indexed or variable structures can leave households exposed to sudden financial shocks.
Your Power, Your Terms
Pick from short-term or long-term plans to enjoy maximum flexibility. You call the shots!
How to Decide Which Type of Energy Plan Type Fits Your Lifestyle
Choosing between fixed and variable electricity rates comes down to your comfort level with risk and your household needs.
Ask yourself:
- Do you want predictable bills each month?
- Are you comfortable signing a contract for one to three years?
- Do you rent short-term or prefer flexibility?
- How much tolerance do you have for seasonal bill spikes?
A fixed plan works best for budget certainty and long-term stability. A variable plan may fit if you value flexibility or expect to move soon.
Why Thousands Choose Just Energy Fixed-Rate Plans
Many Texans choose Just Energy for the stability of a fixed rate. With flexible contract lengths, renewable options, and convenient sign-up, these plans are built to fit a wide range of households.
12-Month Rate Lock
A 12-month fixed plan offers predictable pricing without a long-term commitment. It’s a good option for renters or those who want stability now but still prefer flexibility to make changes in the near future.
If you’re a renter, explore our flexible Renter’s Choice plan.
Mega Saver (24 or 36)
Mega Saver is a fixed rate plan for homes buzzing with life and a thirst for power. It’s designed to shine brightest in high-usage households, delivering optimal savings and unmatched value.
Learn more about our Mega Saver Plans.
24-Month Green Fixed Plan
Customers looking for both price protection and sustainability often choose the 24-month green fixed plan. By adding JustGreen, you can support renewable energy sources like wind, hydro, and biomass while locking in your rate for two years.
Learn more about our Green Energy options.
Same-Day Service and Easy Online Sign-Up
Just Energy makes it simple to switch providers with quick, digital enrollment. In many cases, service can begin the same day, so you can enjoy both convenience and cost certainty without delay. Read more about our same-day electricity service.
Same Day Spark
Sign up before 12:00 pm CT, and we’ll have your power up and running the same day.
FAQs About Fixed-Rate vs. Variable-Rate Electricity
Can I switch from a variable to a fixed plan without penalties?
If you’re on a month-to-month variable plan, you can usually switch without fees. But if you’re under contract, check the terms in your Electricity Facts Label carefully because some plans include early termination fees.
What happens if market prices drop while I’m on a fixed plan?
You’ll continue paying your locked-in rate. While you might miss temporary dips, the benefit is protection from future increases.
How often can a variable rate change?
Variable electricity rates can change monthly, depending on wholesale energy prices and market conditions.
Are fixed-rate plans always more expensive upfront?
Fixed rate plans are not always more expensive upfront. While some fixed plans start slightly higher, they often save money long term by avoiding spikes in variable pricing.
Does a fixed rate include TDU delivery charges?
It depends on the type of plan. A bundled rate will include supply costs and TDU delivery charges, but a plan that is not bundled will include supply costs and the TDU delivery charges will be listed as a separate line item on the bill.
Ready to Lock in Your Rate?
The choice between fixed-rate vs. variable-rate electricity plans comes down to your priorities. If you value predictable bills and long-term stability, a fixed-rate plan can give you peace of mind. For flexibility, a variable plan may suit short-term needs.
With Just Energy, you can lock in a competitive rate, explore renewable options through our JustGreen add-on, and enjoy fast, convenient enrollment. Explore all of our Texas electricity plans here.
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All images licensed from Adobe Stock.
Sources
1. Comptroller.Texas.Gov. “Winter Storm Uri 2021.” October 2021. https://comptroller.texas.gov/economy/fiscal-notes/archive/2021/oct/winter-storm-reform.php
2. ReedSmith. “Texas Court of Appeals sets aside power pricing orders during Uri.” March 21, 2023. https://www.reedsmith.com/en/perspectives/2023/03/texas-court-of-appeals-sets-aside-power-pricing-orders-during-uri
3. The Texas Tribune. “Texans blindsided by massive electric bills await details of Gov. Greg Abbott’s promised relief.” February 22, 2021. https://www.texastribune.org/2021/02/22/texas-pauses-electric-bills/
4. EIA. “2023 Average Monthly Bill- Residential.” Accessed August 22, 2025. https://www.eia.gov/electricity/sales_revenue_price/pdf/table_5A.pdf
5. ABC News. “Texan files $1 billion class-action lawsuit after receiving $9,000 electric bill.” February 25, 2021. https://abcnews.go.com/US/texan-files-billion-class-action-lawsuit-receiving-9000/story?id=76107861
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