Is a fixed-price natural gas or electricity contract likely to save money?
In my area, the fixed prices are based on an average. My gas company will look at my previous months (six months if I remember correctly) payments and give me an average based on that amount. Then I am contracted for a year based on that average. If I lower my costs, I'm under contract and will not see the savings but if I go over for some reason, I will save money there. It really depends on how your utility companies work so I would check with them, look at your previous billing cycles and determine if the plan will possibly save you money. Of course some things can't be planned for such as the economic downturn like someone else mentioned. I can only speak to natural gas but I imagine the answer for electricity is the same. In general, yes, it is better to lock into a fixed price contract as in the long run, natural gas prices increase over time.  However, if you locked (signed a fixed price contract) in prior to the economic downturn, most likely you were better off not doing so but the key is long-term. http://en.wikipedia.org/wiki/Natural_gas_prices However, do your research as fixed priced contracts vary considerably from company to company. http://www.energyshop.com/ I think it's a good time to sign a fixed-term contract right now as I don't see prices coming down much further with global economies are now recovering from the downturn. HTH "I have some numbers to share that may help.  I've been tracking my home's natural gas consumption in a spreadsheet for years.  Much of that time I'd only been interested in the quantity used – to measure my home's efficiency after certain upgrades – but in 2006 I also started tracking the ""Gas Supply Charge"" costs from my local utility, Enbridge, in Ontario, Canada.  My numbers are for the gas commodity only (i.e. excluding delivery and customer charges.) I've never been on a fixed-price contract, so the numbers are supposed to be reflective of market rates.  However, the numbers do differ from real ""spot prices"" because Enbridge estimates gas costs up-front and then applies a ""gas cost adjustment"" at later dates if their estimate was wrong. Natural gas cost per cubic meter for Chris's home http://img686.imageshack.us/img686/6406/naturalgascosts3priorye.png Since 2006, natural gas prices have been generally falling.  The last cost I have on file, from my November 2009 bill, is 12.9 cents per cubic meter – being ~20 cents gas supply rate, less gas cost adjustment of ~7 cents.  My average cost over that nearly 4 year period, January 2006 through November 2009, was 38.4 cents per cubic meter. Considering the current 5-year fixed rate I found is about 29 cents per cubic meter, there is a substantial premium to locking in when compared to current market rates.  However, one can see that during the last 4 years, market prices did substantially exceed that rate for quite some time.  Furthermore, when I last looked at those 5-year fixed rates perhaps a year or more ago, I couldn't find a company charging less than 39 cents per cubic meter.  So, contract rates have fallen as well. Consequently, if we are at a natural gas price low and the economy is to recover, I tend to agree with Cart's answer and suggest it could be a good time to consider a fixed-rate contract. But, do your own due diligence and read the fine print if you go for it. UPDATE: In the interest of full disclosure, shortly after I did my own research above, I signed up for my first ever fixed-rate natural gas contract. :-)" "The answer to this question will vary considerably by state and how utilities are regulated in your area. In New York, ESCOs (Energy Supply Companies) are almost always a ripoff for consumers versus the old-style regulated utility (in NY the utility supply markups are tightly regulated, but ESCOs are less regulated).  You also need to really understand the marketplace rules for ""locking in"" a price. If you can lock in the July price for natural gas for a year, that rocks. There are other factors as well. But even then its a real bet, since weather and supply factors can have a dramatic effect on gas prices in the winter. IMO, the best bet is to run with the market rates and bank the efficiency improvements that you build into your home over time. Some utilities offer ""budget plans"" that smooth out your payments without interest -- I'd recommend that route if predictable bills are your goal." I would argue: Because the company only offers you this if it can make money from it. What you are basically doing is betting against the company.
It's not mentioned in the article, but the state will invariably pay for infrastructure upgrades and maintenance around a project like this. The only way this pays off is if the tax revenue generated is enough to pay for any additional expenditure by the state. And the fact that Foxconn has a track record of not living up to its promises is what prevents this from being a no-brainer. We'll need to revisit the topic in 15 years when this deal has reached its conclusion to know if the gamble was worth it. The thing that is working to Foxconn's advantage here is that there were several states competing for this. The real benefit to the environment will come as the grid is powered by more renwables. Tesla will charge when renwables are generating, store power in its big battery, and feed energy back to the grid during times of high demand or when renewable sources are down Are you assuming that net metering will continue forever? Eventually that will have to stop and you'll only receive the market generation rate (the price before all the markups in the submission's graph) for power exported to the grid which is unlikely to net you much profit. They're trying to, but ratepayers and state governments are fighting back, especially in progressive states.   The big issue is the degree to which you can bank your summer power surplus to offset your winter deficit. You'd think that since you're generating power for the grid in summer you'd get equal credit for that to use in winter when the sun shines less, but power companies do their best to prevent this, so state governments have to mandate it. "This is the best tl;dr I could make, [original](https://qz.com/1017457/there-is-a-point-at-which-it-will-make-economic-sense-to-defect-from-the-electrical-grid/) reduced by 79%. (I'm a bot) ***** &gt; A new study by the consulting firm McKinsey modeled two scenarios: one in which homeowners leave the electrical grid entirely, and one in which they obtain most of their power through solar and battery storage but keep a backup connection to the grid.  &gt; As daily needs for many are supplied instead by solar and batteries, McKinsey predicts the electrical grid will be repurposed as an enormous, sophisticated backup.  &gt; Solar panels and battery prices are dropping fast-lithium-ion batteries have fallen from $1,000 to $230 per kilowatt-hour since 2010-as massive new solar and battery factories come online in China and the US. By 2020, Greentech Media projects, homes and businesses will have more battery storage for energy than utilities themselves.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6kchib/there_is_a_point_at_which_it_will_make_economic/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~155595 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **grid**^#1 **battery**^#2 **utility**^#3 **solar**^#4 **McKinsey**^#5" The key is measuring.  Like any project you need to evaluate a baseline, make a change, then re-evaluate.  Otherwise you are blindly spending money to save, or worse, being manipulated by advertising.   Like Chris W. Rea said before me, using a tool like a Kill-A-Watt to measure the effectiveness of what you are about to do is the most important step.  For example, if you have an incandescent light bulb in a back part of your basement that you never turn on, it doesn't make much sense to replace that bulb with a $9 LED to save money.  If you have an empty freezer in your basement, turn that thing off.  Measure your power usage, then you can know for sure what is the most effective action. If you have a family like mine, the best of intentions still leave lights on all day or tvs on a screensaver all night.  Invest in simple automation like motion sensing outlets or light switches to automatically turn off power.  (It is my full time job to go around a turn off lights, and I want to retire)  The biggest payback that I know of is insulation and caulking of your home to make the energy you do use more efficient.  If you don't have enough insulation, that is a great place to start.  Here is a calculator to estimate the payback of adding insulation. The US government has a cool website with a bunch of tips for saving energy. UNG    United States Natural Gas Fund  Natural Gas USO    United States Oil Fund  West Texas Intermediate Crude Oil UGA    United States Gasoline Fund     Gasoline DBO    PowerShares DB Oil Fund     West Texas Intermediate Crude Oil UHN    United States Heating Oil Fund  Heating Oil I believe these are as close as you'd get. I'd avoid the double return flavors as they do not track well at all.  Update - I understand James' issue. An unmanaged single commodity ETF (for which it's impractical to take delivery and store) is always going to lag the spot price rise over time.   And therefore, the claims of the ETF issuer aside, these products will almost certain fail over time. As shown above, When my underlying asset rises 50%, and I see 24% return, I'm not happy. Gold doesn't have this effect as the ETF GLD just buys gold, you can't really do that with oil. Well, you could get long kw/hr to effectively lock in your high rate, but not suffer from anymore shocks.  You could also (and this is what I would do) get short and activate change through a legal pursuit.  So, get short your light bill via kilowatt hour swaps, and hedge your downside with some longer-dated swaptions. I'm looking at the implied vol for these swaptions on my bloomberg -- it's looking surprisingly cheap.   As far as position sizing, we're looking at some notionals of about $200/month. A pretty large sum. Look into getting leverage through total return swaps or repo financing. Does that help? Last I checked, all business expenses in regards to  * Office Supplies * Stationary * Phone service * Marketing  are all tax deductible....so how does cutting those costs save money when you'll get that money back via the corporate tax code? It's not like we have a lot of options. We have to stop climate change. Natural gas will be increasingly important, and yes it's a fossil fuel, but not nearly as bad as coal or a oil.  Before looking for dealers look at Germany. If only they didn't substitute nuclear with renewables but substituted coal and oil with renewables, they'd have eliminated most fossil fuels. &gt;companies supplying the electricity  For the most part, the transaction costs make trying to play EON, RWE, EDF, et al on the short term basis useless. Those companies are all so big and hedged that almost any pricing scenario isn't going to materially impact them. This isn't PGAE circa 2000. They will be metering their own electric , so yes that's a plus.  And yes I  looked at it the same way,  free money.  I wonder if uploaded a imugr link to the drawings of where they are placing the equipment would help people with determining the benefit. Power Options is one such example of what you seek, not cheap, but one good trade will recover a year's fee.  There's a lot you can do with the stock price alone as most options pricing will follow Black Scholes.  Keep in mind, this is a niche, these questions, while interesting to me, generate little response here. Thanks for that great explanation. I figured you were referring to FAFSA but wanted to be sure. I'm just having my first so i'm trying to plan for the future but I probably won't be paying for college either, it seems like trade schools may be the better deal nowadays. Could you perhaps expand on your reasoning behind wanting to take a loan in the first place? Why would you even consider taking a loan for as much as £7,500 (or even much less) if you aren't planning on buying / investing in anything in particular, and you're not in a bad financial situation? If your account never drops below a hundred or two pounds, why would you need to loan money? Just get yourself a credit card, for those times when you might find yourself without money for a short while. But really, it sounds to me like you should be able to set aside a small sum of money every month and create your own savings buffer to cover these situations.