Fixed rate electricity plans
Expert tips for finding a great fixed rate electricity plan
Our Head of Energy, Meredith O’Brien, has some tips on finding a fixed rate electricity plan for your household.
Meredith O'Brien
Head of Energy
Look for sign-up incentives
Some electricity retailers might offer discounts and other incentives when you sign up for a new plan. When you’re looking to switch, compare your options and see if you can save AND get better value up front.
Read the contract terms
The term duration of your fixed rate is generally between one and 2 years, and there might be exit fees if you decide to switch to another plan or retailer before that term is up. For this reason, reviewing the contract terms, conditions, energy fact sheets and Basic Plan Information Documents is important when you’re looking to switch to a fixed rate electricity plan.
Review your plan when the term ends
Your electricity retailer may switch you to a standing offer when your fixed-rate plan term ends. Standing offers have rates set by energy regulators such as the Australian Energy Regulator to protect consumers and are generally more expensive than market offers. These typically aren’t the most competitive offers, so it’s worth comparing your options when your current plan is coming to an end.
What is a fixed rate electricity plan?
A fixed rate electricity plan is an energy supply plan where your rates are locked for a set period (typically 12 months), so the rates that you are charged do not increase over the period. This means the cost per kilowatt-hour (kWh) of electricity and your Daily Supply Charges stay the same throughout the contract period, even if market prices rise during that time. This type of plan can provide greater bill certainty and protection from rate increases. On the other hand, if the market price of electricity falls over the contract period, you won’t benefit from the lower rates until the fixed term period is over.
Unlike a variable rate plan that can vary through the term of the contract, a fixed rate plan’s prices won’t fluctuate, providing more price certainty for households. Before signing up for a fixed rate plan, check whether usage and daily supply are fixed, as these often vary between retailers and plans.
What is a variable rate electricity plan and how is it different?
In a variable rate plan, the price of electricity can go up or down. A variable-rate electricity plan differs from a fixed rate plan because the price can change with the market. Like a fixed rate electricity plan, you will pay for electricity based on the number of kWh you use, but the pricing is open to change within the term of your offer.
With a variable rate electricity plan from an energy provider, you are exposed to any potential volatility in the electricity market, and prices may spike accordingly. If there are increases in the cost from electricity generators or a shortage in energy generation (i.e. during summer or weather extremes), the knock-on effect could be passed on to you through rate hikes by the electricity provider.
How long do fixed rate electricity contracts last?
Fixed rate electricity contracts in Australia usually last 12 months. However, this may vary by retailer, plan and location. During the contract period, your electricity rates are locked in, giving you greater price certainty until the fixed term ends.
Having a fixed rate plan can be a great way to budget for the year as you know your electricity rates won’t increase. When your contract ends, your retailer may transfer you to a different plan, such as a variable rate market offer or a standing offer, unless you choose a new energy plan.
Who should choose a fixed rate electricity plan?
A fixed rate electricity plan suits households that value price certainty and want protection from potential rate rises during the contract term. This is because the usage rates and supply charges are locked during the contract period. Fixed rate energy plans can make budgeting easier and provide greater predictability for household energy costs.
Fixed rate energy plans may be a good choice if you prefer stable bills, want to avoid energy market fluctuations, or expect national electricity prices to rise. However, if the market rates fall during your contract period, you will not benefit from the lower energy prices until the fixed rate period ends.
Pros and cons of fixed rate electricity plans
The main pro of fixed rate electricity plans is the price certainty that comes with having your rates locked in for a set period, but the disadvantage to that is that you can’t take advantage of market changes.
More specifically, locking in your rates can help you avoid pricing fluctuations driven by electricity generation costs changes, inflation, infrastructure and environmental costs over the term of the plan. Fixed-rate electricity plans can also simplify budgeting, as they may have more predictable usage rates and supply charges over a billing period.
On the flipside, fixed rate plans may have higher rates and daily supply charges when compared to a variable rate plan. Fixed rate plans may offer different promotional discounts or exit fees that apply if you switch retailers before the end of the fixed term.
Where are fixed rate electricity plans available?
Fixed rate electricity plans are available in New South Wales, Victoria, South East Queensland, South Australia and the Australian Capital Territory. These areas have deregulated energy markets where customers can choose from competing retailers and plan types. To find out whether a fixed rate electricity plan is available in your area, compare plans using your postcode or address, as not all retailers offer fixed rate plans, and availability can vary between electricity networks and regions.
In New South Wales, Southeast Queensland and South Australia, you can compare electricity plans against the Default Market Offer, the comparison price set by the Australian Energy Regulator. In Victoria, consumers can compare rates and plans against the Victorian Default Offer and in the Australian Capital Territory, consumers can compare plans against the ACT reference price.
Learn more about fixed rate electricity plans in the following deregulated states and territories:
- Southeast Queensland
- New South Wales
- The Australian Capital Territory
- Victoria
- South Australia.
Meet our energy expert, Meredith O’Brien
As the Head of Energy at Compare the Market, Meredith O’Brien believes in educating Australian customers about the ever-changing gas and electricity market so they can adjust their energy usage habits and get the most out of their energy plans.
Meredith has seven years of experience within the energy industry, following 15 years in financial services. Meredith is a dedicated customer advocate who is passionate about empowering Australians to find the right products to suit their needs by removing the confusion from comparing.