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Are Fixed-Price Electricity Contracts Really Fixed?

July 2, 2014

The most commonly selected type of electricity supply contract is one with a fixed price. In 2013, the Energy Research Council (ERC) surveyed approximately 1,300 executives from small-to-medium sized businesses (SMBs) with less than 250 employees and with average monthly electricity bills less than $25,000. The survey found that 73% of SMB executives are most interested in locking in a fixed-price electricity supply contract.

The ERC’s new research brief, Are fixed-price electricity supply contracts really fixed?, examines supplier contract conditions that can add unanticipated costs to customers’ monthly bills, such as assignability, bandwidth clauses, change-in-law provisions, early termination fees, and expiration procedures. The brief also describes the importance of ensuring each fixed-price quote from multiple competitive suppliers includes the same electricity supply components, such as adders, capacity costs, ancillary charges, gross receipt tax, and sales and use tax. The ERC survey found that only 17% of SMB executives believe a fixed price can be affected by change in law, while 60% believe “fixed price” means no price change whatsoever, and 6% don’t know the definition of fixed price.

APPI Energy is a Charter Sponsor of the Energy Research Council.

Read the entire ERC research brief