Don’t go around handing out blank checks, and you won’t have to worry that someone will fill in a huge amount and try to cash it.
Really, that’s what the people in Texas did—they explicitly signed up to a deal where the price per kWh could change without limit, and pre-agreed to pay whatever the rate was.
Because in theory on average it would be cheaper.
It’s kind of like selling fire insurance—sure, you get this nice steady stream of premiums. But every once in a while, unpredictably, a house burns down and you have to pay for it.
It’s fine to do that if you’re an insurance company and have many customers, so you can figure out how many houses you can expect t- statistically—to burn down each month. AND you buy reinsurance (it’s a thing) in case you’re unlucky and all your customers houses burn down at once.
But it’s dumb to just sell ONE insurance policy, hoping your customer’s house won’t burn down, if you can’t afford to pay for it.
Don’t do that.
Auto-pay is fine for things where the amounts are reasonably predicable—your cable bill, say. Not for things that might vary a lot.
Your answer uses a fair amount of analysis and knowledge in order to avoid this kind of large charge. Maybe perversely, I was asking for methods that do not require analysis or knowledge about contract types. I also doubt that most customers of the Texas company had a good sense of the risk they were exposing themselves too—many might have followed the “scan list for lowest rate, then pick that one” method that I use sometimes.
Don’t go around handing out blank checks, and you won’t have to worry that someone will fill in a huge amount and try to cash it.
Really, that’s what the people in Texas did—they explicitly signed up to a deal where the price per kWh could change without limit, and pre-agreed to pay whatever the rate was.
Because in theory on average it would be cheaper.
It’s kind of like selling fire insurance—sure, you get this nice steady stream of premiums. But every once in a while, unpredictably, a house burns down and you have to pay for it.
It’s fine to do that if you’re an insurance company and have many customers, so you can figure out how many houses you can expect t- statistically—to burn down each month. AND you buy reinsurance (it’s a thing) in case you’re unlucky and all your customers houses burn down at once.
But it’s dumb to just sell ONE insurance policy, hoping your customer’s house won’t burn down, if you can’t afford to pay for it.
Don’t do that.
Auto-pay is fine for things where the amounts are reasonably predicable—your cable bill, say. Not for things that might vary a lot.
Your answer uses a fair amount of analysis and knowledge in order to avoid this kind of large charge. Maybe perversely, I was asking for methods that do not require analysis or knowledge about contract types. I also doubt that most customers of the Texas company had a good sense of the risk they were exposing themselves too—many might have followed the “scan list for lowest rate, then pick that one” method that I use sometimes.