One factor to consider when you shop for natural gas providers is if you should select a fixed rate plan or a variable rate plan.
On a fixed rate, you will pay a set amount per therm for the natural gas you use, whether the actual price of natural gas goes up or down.
On a variable rate plan, your natural gas rate will go up and down depending on market conditions.
Like other financial choices, both options have risks and rewards.
Benefits of Fixed Rates from Natural Gas Providers
The major benefit to a fixed rate, of course, is you know exactly how much you’ll pay for natural gas, regardless of market conditions. If you are on a fixed income or are very close to living paycheck-to-paycheck, you may not be able to take chances on home heating costs rising.
Granted, if it’s a cold winter and you use your gas heat more, you’ll pay more even on a fixed rate. But you have more control over your own energy consumption than market rates.
Because of the security afforded with a fixed rate plan, you’ll pay a bit more per unit (measured in mcf). Some natural gas providers charge fees for a fixed rate plan.
Benefits of Variable Rates from Natural Gas Suppliers
Variable rates often cost less than fixed rates up front, but you’re taking a gamble on the overall price of natural gas.
In the end, you could save hundreds of dollars per year with a variable rate plan, but it could also wind up costing more. Before you sign up for a variable rate plan, make sure there is a cap on the maximum rate you will pay.