When comparing electricity plans, one of the first decisions you'll face is whether to choose a fixed or variable rate. The answer isn't always obvious — it depends on your usage patterns, risk tolerance and how long you plan to stay with the same retailer.
Fixed rate electricity plans
A fixed rate plan locks in your usage rate (cents per kWh) and daily supply charge for a set period — usually 12 or 24 months. What you pay per unit of electricity won't change during that period regardless of market movements.
Advantages of fixed rates
- Predictability — you know exactly what you'll pay per kWh
- Protection if wholesale electricity prices rise significantly
- Easier to budget for energy costs
Disadvantages of fixed rates
- You miss out if market rates fall
- May have early exit fees if you leave before the contract ends
- Rates may still change with notice (read the fine print)
Important: In Australia, most "fixed rate" electricity plans do not guarantee a fixed price for the entire contract period. Retailers can typically change rates with 10–20 business days written notice. Always read the product disclosure statement carefully.
Variable rate electricity plans
Variable rate plans allow your retailer to change your rates at any time, with notice. These are often used to attract new customers with low introductory rates that later increase.
Advantages of variable rates
- Usually no exit fees — switch whenever you like
- Rates may decrease if wholesale prices fall
- More flexibility to respond to better offers
Disadvantages of variable rates
- Rates can rise, sometimes significantly
- Introductory discounts may expire
- Less predictability for budgeting
Time-of-use (TOU) rates: a third option
TOU rates charge different prices depending on when you use electricity. Peak periods (typically weekday afternoons and evenings) attract higher rates, while off-peak periods (overnight, weekends) are much cheaper.
| Period | Typical hours | Rate (approx.) |
|---|---|---|
| Peak | Mon–Fri 2pm–8pm | 35–50 c/kWh |
| Shoulder | Mon–Fri 7am–2pm, 8pm–10pm | 20–30 c/kWh |
| Off-peak | 10pm–7am, weekends | 12–18 c/kWh |
TOU plans suit households with smart meters that can track usage by time period. If you work from home and use power throughout the day, TOU may cost more than a flat rate.
Which type of rate should you choose?
| Your situation | Best rate type |
|---|---|
| Predictable income, dislike surprises | Fixed rate |
| Likely to move or switch soon | Variable (no exit fees) |
| Home during the day, heavy daytime use | Flat rate |
| Can shift appliances to evenings/weekends | Time-of-use |
| Have solar panels | Compare feed-in tariff rate too |
Frequently asked questions
Can energy retailers change fixed rates during a contract?
What happens to my energy plan if I move house?
Is a time-of-use plan better than a flat rate?
How do I know if my energy rate is competitive?
Are green energy plans more expensive?
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