Understanding Fixed & Variable Rates

There is a difference between fixed and variable rates. You will want to find out if the supplier offers fixed or variable rates, and understand the advantages and disadvantages of each.

NOTE: Cold and hot temperatures may increase the use of your heating units, which, in turn, will translate into higher energy bills whether you are on a fixed or variable rate.

Fixed Price

A fixed price is an all-inclusive per Ccf/Mcf/Therms price that will remain the same for at least three billing cycles or the term of the contract, whichever is longer. This will give you certainty that your price will not change during the term of the agreement; however, if market prices fall, you may have to wait until your contract expires to get a lower price.

Unless you act prior to the expiration date in your contract, your rate may change to a monthly variable rate. You should read your contract’s disclosure statement for the terms and conditions to find out what happens after your term expires.

Variable Price

A variable price is an all-inclusive per Ccf/Mcf/Therms price that can change, by the hour, day, month, etc., according to the terms and conditions in the supplier’s disclosure statement.

If you select a variable rate, the rate may change with market conditions, so, if market prices increase, your rate may increase. If market prices drop, your rate may decrease.

Fixed Rates vs. Variable Rates

Fixed Rates

Variable Rates

An all-inclusive per Ccf/Mcf/Therms price that will remain the same for at least three billing cycles or the term of the contract, whichever is longer. A fixed price will remain the same, usually for a set period of time. This will give you certainty that your price will not change during the term of the agreement.

An all-inclusive per Ccf/Mcf/Therms price that can change, by the hour, day, month, etc., according to the terms and conditions in the supplier’s disclosure statement. If you select a variable rate, the rate may change with market conditions.

If market prices fall you may have to wait until your contract expires to get a lower price.

If market prices increase, your rate may increase. If market prices drop, your rate may decrease.

The certainty of getting a fixed rate could cost you a little more money.

If you follow energy market prices and adjust your energy usage accordingly, you may save money.

Provides stability, especially when you’re budgeting your energy costs.

Changing rates may make it hard to predict your monthly bill and budget your expenses.

Long-term fixed price contracts may have cancellation fees. Be sure to ask your supplier/read your contract for the terms and conditions.

Variable contracts often do not have an early cancellation fee, but check with your supplier. Make sure your read and understand your contract for the terms and conditions.

Extreme weather temperatures will not change your fixed rate. However, your energy usage may increase because of the extreme temperatures - creating an increase in your bill.

During extreme hot or cold temperatures, wholesale energy prices may increase dramatically, which may increase your per Ccf/Mcf/Therms price. In addition, extreme temperatures may increase your energy usage which further increases your bill.

Questions & Answers on Fixed and Variable Rates

Q: If I choose a variable rate, can the rate on my bill increase month to month?

A: Yes.

Q: Am I at risk for increases in my bill if the natural gas market fluctuates?

A: Yes. Whether you have a fixed or variable rate, you may experience higher bills during periods of market volatility.

Q: If my bill seems incorrect, or my rate is inaccurate, what should I do?

A: There are several things you can do.

Q: If I still have a discrepancy with my bill after contacting my supplier, what can I do?

A: Contact the PA PUC’s Bureau of Consumer Services at 1-800-692-7380.

Q: Is budget billing available?

A: It is very important to ask your natural gas utility and supplier if budget billing is available. For more information, go to Help Paying Your Bill.

Unlimited Usage Flat Bill

Another option that may be available in your area is the Unlimited Usage Flat Bill. This is a plan that is a locked-in monthly price that is not based on Ccf/Mcf/Therms usage. This gives consumer unlimited natural gas usage at one steady rate that cannot change during the contract’s term. A flat rate is defined as a fixed charge for goods and services that does not vary with changes in the amount used, volume consumed, or units purchased.