Energy Shopping 101 Now may be the time to lock in on fixed-price energy contracts

US (6/4/2009) - Millions of homeowners throughout the U.S. are struggling each month amid what has been described by many experts as the worst economic slump since the 1930s. The recent shift in the economic landscape means people are trying harder than ever to manage expenses to keep their budgets balanced.

Planning for their energy costs is among the more difficult tasks facing homeowners this year. While wages and other expenses have remained relatively stable in the past few years, energy prices have been anything but predictable. Price spikes last summer wreaked havoc on household budgets, and were a costly reminder of how rising energy prices can be a heavy hit on the pocketbook.

However, all too often consumers don’t think about the price they are paying for electricity or natural gas until it’s too late. With the recent decline in energy prices beginning to ease, many sense now is the time to lock in on energy prices.

“Right now energy prices are the lowest they have been since 2004," said Mike Beck, vice president for Direct Energy, a major retail energy and services provider. “Last summer energy prices peaked from $14 to $16, but plummeted to their current $3-$4 level after the onset of the economic downturn. That’s a drop of nearly 75 percent; proof that market prices can be very volatile.”

For those not familiar with their energy options, the first thing to understand is that many consumers have the ability to make a choice about who they buy their energy from, what price they will pay and for how long. Much like cell phone service, there are a variety of options. For example, variable-priced plans tend to closely follow market prices. While they may offer value in a declining market, variable-priced plans do require consumers to be aware of changes in market prices that could affect what they pay for their energy. Variable-priced products do work well for some consumers, but for others, the risk that prices could go up is not one they're willing or financially able to take. By locking in to a fixed-price plan that fits their needs, many consumers are afforded the peace-of-mind and stability that comes with knowing what price they will pay for the long term.

"Considering that energy prices fluctuate as the result of uncontrollable factors like oil prices or extreme weather, we find that many consumers are valuing the ability to lock in to a fixed-price plan,” says Beck. “While we can’t tell consumers what to do, we do think that now is a good time to think about locking in a fixed rate.”

Before making the decision to lock in, consumers should consider the following:

- Do I want a fixed-price plan that will give me price stability, or am I comfortable with a variable-priced plan where my prices can go up or down based on market prices?

- How long do I want to lock prices in for?

- Does the provider have the resources to meet their customer obligations in a potentially volatile energy market?

- What fees will be applied if I decide to terminate my current or prospective agreement?

- Do I understand the terms and conditions of the agreement I’m currently on, and the one I’m looking to sign on to?

Direct Energy offers both variable options for consumers who want the flexibility of a rate that moves with the market, and fixed-price options for consumers who seek certainty and stability. For more information about Direct Energy’s products and services, please visit www.directenergy.com

The information presented here was gathered and compiled for the convenience of our audiences and is not intended for trading purposes or advice. This may not be used or relied upon for the purpose of any claim, demand and/or action (legal or otherwise)

About Direct Energy
Direct Energy is one of North America’s largest energy and energy-related services providers with over five million residential and commercial customer relationships. Direct Energy provides customers with choice and support in managing their energy costs through a portfolio of innovative products and services. A subsidiary of Centrica plc (LSE: CNA), one of the world’s leading integrated energy companies, Direct Energy operates in 21 US states plus the District of Columbia and 10 provinces in Canada. To learn more about Direct Energy, visit www.directenergy.com.

Direct Energy® is a subsidiary of Centrica plc. All rights reserved. Centrica was created following the demerger of British Gas plc in 1997 and is now a leading supplier of energy and related services. To read more about Centrica plc please visit www.centrica.com.