With indexed rate electricity plans, the rate you pay for electricity depends on specific rules or complex mathematical formulas defined by the electric company. Indexed rate plans can be month-to-month plans, or they can lock you in for a specific length of time.

 

Many indexed rate electricity plans have rates based on the price of natural gas, which changes almost daily, so chances are you’ll be paying a different rate every month. Other indexed plans are tied to the seasons of the year, with a higher rate in the summer when electricity demand increases so you may pay a higher rate when you typically use more electricity. Regardless of which formula your company uses to determine your rate on an indexed plan, the good news is the law says it must be made publicly available to customers.

 

First Choice Power doesn’t think indexed rate plans are best for residential customers because they can be risky and puts the burden of tracking rates on the customer. Unlike a variable rate plan, where the provider has the ultimate control over their rates, indexed plans make rates dependent on forces outside of the company’s control. Many folks are tempted by the low rate of an indexed plan, only to open up their bill a few months later and discover they’re paying much more. That’s just not how we like to do business. We believe you shouldn’t have to worry about the rate you’re going to pay for electricity each month.