As of October 1, 2015, electricity suppliers will no longer be able to offer new variable rate plans to Connecticut residents. Lawmakers are heralding the ban as a win for consumers. But, this doesn’t necessarily mean variable rates are a thing of the past. Read on, we’ll break it down for you.
What Is A Variable Rate Plan?
When you sign up for a variable rate plan with a supplier, the price you pay for your electricity varies month to month based on the market price. While this means you may get a great deal on electricity rates when market rates are low, it also puts you on the hook if rates suddenly skyrocket.
Another plan option available to consumers is a fixed-rate plan. When you sign up for a fixed rate plan, you’ll pay the same rate for your electricity or gas for the duration of the plan.
How Will The Ban Affect Connecticut Residents?
Here’s where it gets tricky. The ban would prohibit suppliers from offering new variable rate contracts. However, CT residents can still sign up for fixed-rate plans that will roll over to variable rate plans once the fixed rate contract term has ended. As the Hartford Courant points out, this rollover effect is the main reason residents get stuck paying variable rates now.
The good news is that the law also includes provisions for Connecticut’s Public Utilities Regulatory Authority (PURA) to establish a process to determine what happens when a customer of an electric power provider has their contract expire and does not take any action to renew it. Stay tuned for more on that front as it develops.