What are the different types of energy plans?

November 22nd, 2023

What are the different types of energy plans?

Here's what you need to know up top:

  • Fixed-tier energy plans are the most common but be mindful that the rate is not determined by time of day but on your average monthly usage.
  • Free nights and weekends sound great but there's almost always a catch because you could be paying a considerably higher daytime rate that may not average out on your monthly bill.
  • Flex plans are awesome, but make sure you check out what your average rate would be on non-flex days/times so you're not paying more than you think.

Shopping for an energy plan can be confusing for some, especially with all sorts of variations in the marketplace. There are three types of common energy plans: fixed-tier plans, free nights and weekend plans, and flex plans. If you don't know what you're looking at, you could fall victim to a clever marketing message and end up with a bigger bill than you thought.

Before you sign the dotted line, we put together a quick guide for you of things to watch out for when shopping for an energy plan. 

What are fixed-tier energy plans? 

Fixed-tier plans are some of the most commonly used plans across many energy providers. With tiered plans, the all-in rate is not determined by the time of day but rather will change based on your monthly usage. Companies will advertise their tiered rate plans, based on a 1000kWh average, which if you used that amount would be the lowest rate you pay. But if you use significantly more or slightly less than 1000kWh for the month you will be charged a much different rate.

For example:

500kWh is an average of 22¢/kWh

1000kWh is an average of 14¢/kWh

2000kWh is an average of 18¢/kWh

Your fixed rate will be something quite high like 16¢ (not including TDU fees). If you use greater than or equal to 1000kWh for the billing period, you’ll get a nice credit of $50 - $75 towards the bill. Now that may sound nice, however, if you use anything less than 1000kWh you won't get the credit, or if you use quite a bit more like 2000kWh the all-in rate including all the TDU fees might be greater than a standard fixed-rate plan. Just imagine the spike in your bill during the high-usage summer months or how low your bill could have been during the winter months with low usage. With all this being said, we would only recommend this plan to customers who really monitor their usage.

What are free nights and weekends energy plans?

"Free" will catch just about anyone’s attention, so when you see a plan marketed with something “free” it’s of course super interesting! With free nights and weekend plans, you will get free electricity throughout the night or on weekends. An example of this may be from 11 PM to 7 AM or Saturday and Sunday when the electricity you use is completely free. However, during the day from 7 AM to 11 PM or on weekdays, Monday through Friday, your rate will be considerably high. For example, in today's market, this rate can be at 24¢/kWh to 28¢/kWh. If you use below 35% of your usage during the free periods, this can average you an overall rate that’s higher compared to standard plans that may average you 15¢/kWh for the whole billing period.

What are flex energy plans?

Flexible aka “flex” energy plans are a bit different than free nights or weekends but will typically follow the same kind of formula. For these plans, you will have two separate rates at different times of the day. For example, you may be charged a rate as low as 11¢/kWh during their set off-peak times (ex. 10 PM - 4 PM, and a higher rate of 20¢/kWh to 26¢/kWh during their peak times (ex. 4 PM to 10 PM). Once again, this might average you more than a standard fixed-rate plan, so it's best to understand how much of your usage will be consumed during those peak times before you make your decision.

Choosing your energy provider should be as easy as shopping for a new box of cereal: simple and easy!

At Octopus Energy, you don't need a lucky charm to get a good plan because we offer a straightforward approach with a competitive fixed rate that eliminates the need to micromanage your energy consumption. (Because who loves a micromanager? No one.)

We believe your energy choice should be as easy as possible, so you can just turn on a light switch without thinking twice about it.

If cheaper, easier, and greener energy sounds good to you, join us! Get your hassle-free quote and see why thousands of Texans are switching to Octopus Energy.

Noah Wilkens

Noah Wilkens

Energy Specialist

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