How to Pick Which Energy Plan Is Best for You

Learn how to find the right electricity plan.

Written by Dominique Sabins

Edited by Jamie Cesanek

Last updated April 25, 2025

Compassionate Eye Foundation/Gary Burchell/DigitalVision/Getty images

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• Choosing the best energy plan depends on your budget, priorities, and energy needs.
• There are several types of plans to choose from, each with advantages and disadvantages.
• SaveOnEnergy is a free energy marketplace that lets you find, compare, and shop for the best power plans for your home or business.

How to choose the right electricity plan

If you live in a deregulated energy market, you can choose your energy plan from several electric companies. While deregulation provides more flexibility, it can also be overwhelming to sort through all your options if you’ve never done it before. It may be tempting to choose the first plan you find or the cheapest option, but there are other factors to consider. It’s worth taking your time to select a power plan that works best for you.

SaveOnEnergy can help you choose the right electricity plan based on your specific needs. This guide can help you make an informed decision about which electricity plan is right for you.

Which type of energy plan is best for me?

The best energy plan for you should closely match your budget and energy usage. You’ll benefit the most from a plan that doesn’t require changing your habits or living situation. Explore some of the most common choices on our marketplace — and as you compare your options, think about which plan pairs nicely with your current energy needs.

Fixed-rate plans

Best for: residents who value predictable bills and can commit to a contract.

Fixed-rate plans let customers lock in a set rate per kilowatt-hour (kWh) for the entirety of the contract, which can last between 12 and 36 months. The electricity rate you pay doesn’t change, regardless of market conditions and the wholesale cost of energy. With a fixed-rate plan, you can enjoy predictable electricity bills because you have a guaranteed rate.

This type of plan requires you to sign a contract. If you cancel your contract before it expires, your provider may charge an early termination fee (ETF). However, if you cancel your service because you’re moving to an unserviceable address, your provider will not charge an ETF.

Variable-rate plans

Best for: residents who need a short-term plan, move often, or are shopping during an expensive time.

Variable-rate plans do not require a contract, so you can switch plans at any time. The price you pay per kWh with a variable-rate plan is based on the market rate of electricity, meaning your rate could change monthly. This has benefits and risks. If the market price is low, then your rate could be cheaper, but it could also go up if market prices spike.

A variable-rate plan could be a good option if you need a short-term electricity solution. For residents who move often, this offers the flexibility to cancel anytime with no penalty. Similarly, if electricity rates are currently high in your area, a variable-rate plan could let you wait out the peak season and switch to a fixed-rate plan once prices drop.

No-deposit plans

Best for: shoppers who want to avoid paying a deposit.

Energy providers run a soft credit check to learn if you meet their credit criteria. If your credit is high enough, then you most likely won’t need to pay anything to activate your account. However, if you don’t meet their threshold, you may have to pay a deposit to begin service. The good news is that some providers offer prepaid electricity plans to help qualifying customers with low credit skip the upfront cost.

On our marketplace, you can filter by your credit level to find providers that match.

Renewable energy plans

Best for: eco-conscious shoppers who want to invest in renewable energy.

If you’re trying to become more environmentally conscious, a renewable energy plan may be the best power plan for you. Renewable energy plans are powered by green energy sources like solar or wind. The exact percentage of green energy included in the mix will depend on the specific plan and whether your state has renewable energy requirements.

Some providers, like Green Mountain Energy and Gexa Energy, specialize in 100% renewable energy plans. If lowering your carbon footprint is important to you, filter for “green energy” when searching for your plan on SaveOnEnergy.

Other types of plans

The following are a few other less common plans you can consider when shopping.

• Indexed-rate plans: With this type of plan, the rate you pay may fluctuate over time, as with a variable-rate plan. Unlike variable-rate plans, however, the rate you pay with an indexed-rate plan is based on a mathematical formula tied to a commodity index. Before signing up for an indexed-rate plan, it’s very important that you understand the formula it follows. The plan’s EFL should outline all the details you need to know. Keep in mind that Texas residents are not allowed to purchase indexed-rate plans.
• Time-of-use plans: Some providers offer time-of-use plans, which charge different rates depending on the time of day or week. The perk of having time-of-use plans is that you can sometimes cut down costs by doing energy-intensive chores, such as laundry, during free or cheaper hours, usually at night or on the weekends. If you know your usage habits, a time-of-use plan could help you save on your monthly bill.
• Flat-rate plans: A flat-rate plan allows customers to pay the same monthly rate for electricity or natural gas usage. These plans may require a customer’s usage history to determine the plan’s price, which is an average price determined over a certain period. It is also possible, depending on your plan’s terms and conditions, that you could be charged for going over an allotted usage.
• Prepaid plans: Prepaid plans are a type of no-deposit plan that lets you pay for your electricity upfront and reload your account as needed. Since you pay for your electricity before you use it, you do not need to pay a deposit.

How long do energy contracts last?

Some types of energy plans — like fixed-rate plans — require you to sign a contract. Energy contracts typically last between 12 and 36 months, although shorter contract options may be available, depending on the provider. If you’re a renter, consider a contract that aligns with your lease. If you own your home, you may want price protection with a fixed-rate plan that lasts multiple years.

• Multi-year plans are a great fit for homeowners or renters who prefer long-term price stability. Any energy market fluctuations won’t impact you while you are under contract. Also, customers with multi-year plans have peace of mind from not having to shop for a new energy plan for a while.
• 12-month plans are a good solution for people who prefer price protection for a full year. This term length is also a great fit for renters who aren’t sure if they will renew their lease at the end of the 12 months.
• Shorter-term plans, such as three- or six-month fixed-rate plans, are available from some energy suppliers. These terms may be a good fit for consumers who want to secure a stable rate for a short period of time because of the season or if they have a short lease. It can also be easier to avoid ETFs with a shorter-term plan.

Things to keep in mind when picking an energy plan

Ultimately, choosing the best energy plan depends on your priorities and goals. Use this checklist to determine which plan best suits your needs.

• Household size: Some plans have better rates for certain usage tiers. Our marketplace lets you filter by household size (500 kWh, 1,000 kWh, and 2,000 kWh) to help you find plans tailored to your usage level. If you are unsure how much electricity you typically use, consult your past energy bills to find your average monthly consumption. You may pay an elevated rate if you don’t use the minimum amount of energy listed in your plan, so it’s important you know your typical usage before signing up.
• Commitment length: To avoid paying unnecessary termination fees, consider how long you intend to stay in your home. This will help you decide whether to sign a long- or short-term contract.
• Read the Electricity Facts Label (EFL): Carefully review the EFL before signing up for a plan. You can find the EFL for every plan on our marketplace when shopping by clicking “more details” under the plan card and navigating to “plan documents.” This step ensures that you understand the terms of your contract and prevent any surprises down the line. The EFL contains important information such as your rate, contract length, fees, and more.

How the time of year impacts energy costs

The season is one of the largest factors influencing the wholesale cost of electricity. Summer and winter tend to be more expensive because consumers use more electricity, which drives up demand and prices. When temperatures are high or low, homes and businesses use AC or heating systems more frequently to stay comfortable. On the other hand, spring and fall are typically cheaper because the weather is mild and your HVAC is used less frequently.

Due to this trend, electricity rates are usually cheaper in spring and fall. Consider locking in a long-term fixed-rate plan during one of these milder seasons. If you have to shop for energy during winter or summer, it may be best to select a short-term or variable-rate plan so you can switch once prices drop.