Contracting vs. Standard Rates: Should You Hold Out for Better Opportunities?

Phil McCabe
Phil McCabe

Is staying on the standard rate for a period of time going to save money in the long run?

When electricity prices seem high, it's natural to hesitate before signing a contract. Many customers consider staying on the standard variable rate for a while, hoping prices will fall — and then lock in. But while this might seem like a smart, flexible approach, the numbers often tell a different story.

Let’s walk through a real-world example to see why delaying can end up costing more than it saves.

Scenario: Waiting for a Slightly Better Rate

  • Offered 24-hour contract rate: 30c per kWh

  • Standard variable rate: 48c per kWh

  • Monthly electricity usage: 1,200 kWh

You believe rates might drop to 27c per kWh in two months, so you decide to hold off on contracting, staying on the 48c standard rate in the meantime.

What’s the Cost of Waiting?

The difference between the offered contract rate (30c) and the standard rate (48c) is 18c per kWh. Over 1,200 kWh, this means:

  • Extra cost per month: 1,200 kWh × €0.18 = €216

  • Extra cost over two months: €216 × 2 = €432

Now, Let’s Say Rates Do Fall to 27c

You eventually sign a contract at 27c, saving 3c per kWh compared to the original 30c rate. Over 12 months, with 1,200 kWh per month, that’s:

  • Annual usage: 1,200 kWh × 12 = 14,400 kWh

  • Savings from the lower rate: 14,400 kWh × €0.03 = €432

The Bottom Line

By waiting two months, you spent €432 more on the standard rate. Even though you later saved €432 by locking in at a slightly lower rate, your gain is completely wiped out by the loss — netting you zero benefit.

Worse yet, if rates don’t fall as expected, you’re left having paid more and missing the opportunity to secure a better deal earlier.

Conclusion

Waiting for prices to fall before contracting might seem logical, but the reality is that the short-term overpayment often cancels out — or even exceeds — any long-term gains. In volatile energy markets, certainty beats speculation. Locking in a competitive rate today often puts you in a stronger financial position than trying to time the market perfectly.