What is Fixed All-In?

Jamie M Staff asked 4 years ago
1 Answers
Jamie M Staff answered 4 years ago

Although Retail Energy Suppliers can offer many product options to businesses considering energy supply, the two most common options that most suppliers carry are fixed all-in and index supply. Fixed all-in and index energy supply are the standard options that will meet the needs of most businesses looking to take control of their energy spend.

What is fixed all-in?

A fixed all-in price/product offer allows a business to lock in a rate for the energy supply portion of a bill for a set amount of time.

Energy bills are made up of three sections:

  1. Energy supply
  2. Energy delivery
  3. Taxes & Other

Deregulation allows a business to control the energy supply portion of their bill by giving them the ability to select different product types and rates from Retail Energy Suppliers.

Although monthly usage varies as the amount of energy a business uses will vary, the rate that a business will pay on a fixed all-in plan will not change. The formula for a business that is using a fixed all-in energy supply plan looks like this:

fixed rate x (fluctuating) monthly kWh = energy supply $

As you can see from the above formula, a fixed rate will allow a business to keep half of the formula from varying month to month.

What are the benefits?

Businesses looking to eliminate risk will be interested in fixed all-in offers as fixed prices making budgeting much easier. As mentioned above, the amount of energy used will vary based on behavior, but the rate paid for that energy does not change. No matter what happens in the market, a business with a fixed all-in rate will be locked into their contracted price, protecting them from these market changes.

A fixed price creates budget stability and allows a business to better predict their energy costs as there is one less unknown variable in the equation.

What are the negatives?

If the market moves down and energy prices fall, a business with a fixed rate will not have the ability to change their rate until their contract expires. If the market rate for energy falls below their contracted rate, they could end up paying more for energy than what is available in the marketplace.

Who should consider fixed all-in plans?

Businesses with low risk tolerance, those that watch their budget closely, and those that don’t want to spend time and energy staying up to date on the energy markets should consider a fixed all-in rate.