What is the cheapest energy plan type?

For most consumers, a fixed-rate plan typically offers the most savings as it shields against market fluctuations and rate spikes. With a fixed-rate plan, your energy rate remains constant, aiding in budgeting for your monthly bill. While some customers might benefit from variable-rate plans, fixed-rate plans are generally considered the most cost-effective by energy experts.

How can I lower my electricity bill?

Reducing your energy consumption is the most direct method to lower your electricity bill. Simple steps like turning off lights and unplugging unused devices can help. Additionally, consider upgrading to energy-efficient appliances or exploring cheaper electricity rates to further decrease your bill.

How do I avoid deposits and fees?

To bypass paying a deposit, you can qualify for your provider's credit limit or opt for a no-deposit prepaid energy plan. Avoiding early termination fees involves either fulfilling your contract term or relocating outside your provider's service area.

What are the different energy rate and plan types?

Learn about your deregulated energy options.

Written by Dominique Sabins

Edited by Aviva Tenenbaum

Last updated 2/21/2025

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Key Points

Your electricity rate is how much you pay for your energy.
An energy plan is the entire package you choose for your electricity.
There are three main energy rate types: fixed, variable, and prepaid.

Electricity rates vs. plans

Your electricity rate is the amount you are charged per kilowatt-hour (kWh) of energy consumed. A kilowatt-hour is the unit of measurement that electricity companies use to calculate how much energy is used in a set period of time.

In deregulated states, there are three main plan types: fixed-rate, variable-rate, and prepaid. An electricity plan is the whole energy package you sign up for. Your plan encompasses your electricity rate, plan length, fees, bill credits, and more.

This guide breaks down these main rate types and offers a few unique plan options for customers in deregulated areas.

Fixed-rate plans

Fixed-rate plans are the most common electricity plan and rate type you will encounter when shopping for energy. On a fixed-rate plan, the rate you pay for electricity stays the same for the duration of your contract. This protects you from fluctuations in the energy market, so you won’t have to worry about rates spiking during times of high demand.

Fixed-rate plans come with a contract usually lasting 12, 24, or 36 months. If you decide to end your contract early, you’ll likely need to pay an early termination fee (ETF). However, you won’t have to pay an ETF if you move to an address outside your current provider’s service area.

A fixed-rate plan may be a good choice if you:

Value stability and predictability in your energy bills
Know how much electricity your home or business uses
Can commit to the contract’s length

Variable-rate plans

With variable-rate plans, the rate you pay fluctuates from month to month, and comes with a certain amount of risk. Depending on when you purchase your plan, you might be able to secure a lower starting rate or take advantage of lows in the market. But when there is a spike in demand or the wholesale cost of electricity increases, your energy rate will also increase, sometimes significantly.

Variable-rate plans do not require a contract, giving you the flexibility to switch to another plan at any point with no ETF.

A variable-rate plan may be a good choice if you:

Need a short-term energy solution
Don’t want to be locked into a contract
Want to avoid early termination fees

No-deposit and prepaid plans

Many energy providers will run a credit check before beginning service, and may charge customers an initial deposit before beginning service. You can usually avoid this initial fee if your credit score meets the provider’s requirements. However, if you want to avoid paying a deposit, some companies offer no-deposit options.

A common type of no-deposit plan is a prepaid electricity plan, which allows you to pay for your electricity upfront and top up your account as needed.

A no-deposit prepaid energy plan may be a good choice if you:

Have a low credit score
Want to avoid a deposit
Want a flexible energy plan that allows you to pay as you go

Free nights and weekends plans

Free nights and weekends plans are a type of energy plan that offers discounted electricity rates during certain periods. Under this type of plan, your electricity rate is reduced to zero during nights and weekends. The free window will differ based on your provider and plan, so it’s important to carefully read the Electricity Facts Label (EFL) to know when your energy is discounted.

SaveOnEnergy partners with TXU Energy to offer free nights and weekends plans. Enter your ZIP code on this page to explore TXU’s availability near you.

Free nights and weekends plans may be a good choice if you:

Are typically only home during the evenings or the free window
Mostly run large appliances at night

Renewable energy plans

Renewable energy plans source some or all of its energy from renewable sources, such as solar energy and wind power. If you’re interested in reducing your carbon footprint, consider Gexa Energy or Green Mountain Energy for your next power plan.

Renewable energy plans may be right for you if:

You want to lower your household’s carbon footprint
You want to invest in renewable energy through your daily electricity usage

How do I know which plan and rate type is right for me?

Determining the best option for you comes down to understanding your home or business’s energy needs. Here are some tips from our energy experts to help guide your decision:

Know your average monthly usage. This information will help determine which plan offers the best rate for your typical energy habits.
Decide what you value. Fixed-rate plans offer more stability, whereas variable-rate plans offer flexibility. Before you decide on a plan, determine which is more important for your needs.
Contract length. Consider how long you plan on living in your current home. If you plan to move soon, or you’re a short-term renter, a variable-rate plan might be best to allow more flexibility without paying an ETF. However, if you intend to stay in your home for over a year, fixed-rate plans offer more savings.

Our free marketplace allows you to compare your options and pick the best match. Sign up online or over the phone with one of our agents. If you need help choosing a plan, call the number on your screen for assistance.

Frequently asked questions

A fixed-rate plan generally offers the most savings for the majority of consumers because it protects against market fluctuations and rate spikes. Fixed-rate plans also allow you to budget for your monthly energy bill because your rate stays the same. Some customers may still benefit from variable-rate plans, but most energy experts agree that fixed-rate plans are the cheapest overall.
Using less electricity is the most direct way to lower your energy bill. Try turning off your lights and unplugging unused devices. Other options include switching to energy-efficient appliances or shopping for a cheaper electricity rate.
You can avoid paying a deposit by qualifying for your provider’s credit limit or choosing a no-deposit prepaid energy plan. To avoid paying an early termination fee, you must either stay with your contract until it ends or move outside your provider’s service area.