Startex Power 12 month Fixed Electric Rate

Since we wrote about this offer in February the Texas electric market could have gone up or down since then. Because of this the discount rate now could be higher or lower from what was offered in February 2009. Once you lock in to the electric rate it is fixed but Texas electric rates change quite frequently with the commodities market so it is important to lock in at the right time.

Texas Residential Electricity Explained

Residential electric companies competing in Texas have begun to offer several different electric rate products that are a mix match of both fixed terms and variable rates. What first looks to be like a great offer can come back to sting you later. The latest issue I have seen is with Texas Retail Electric Providers requesting that you sign a 12 month contract to be on their variable rate. The issue we have with this is that these energy companies are working with a base energy rate that they do little in the form of hedging. This means if the rate skyrockets they pass that issue on to you and you end up paying a really high bill one month when the variable market goes through the roof. To request that the customer sign a contract to a rate they have no guarantee on is a bit insulting to me. Most electric companies out there however will have you sign a 6, 12 month or longer contract for a fixed electric rate. There is absolutely nothing wrong with this as they have bought and hedged this energy at this term in order for you to buy it and insure that you pay that same rate the rest of the year. There is an actual service being performed here and a reason you need to sign a contract. If you were to break the contract early if perhaps energy rates went down and then signed up with a different electric company your previous electric company would be out of pocket for the difference in the rate they sold you and where the market is at now. Since they bought this electricity back when the market was higher they now have to sell it back at a lower price then they paid for it. They end up losing money on you leaving and going somewhere else. The variable market rate however is not hedged and is basically just an index price. The retail electric provider adds their adder onto the index price and that is their margin. They don’t hedge the energy but allow it to go up and down and sell it as a market rate with you carrying the risk. There is no reason to sign a contract on this type of rate as the risk is past on to the customer.

Learn more about Texas Electricity

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