What is a fixed bill?

It's an energy pricing scheme in which a consumer pays a pre-set sum for their energy consumption over a certain period. The price is independent of the amount of energy used or the unit price of the energy. Energy companies can offer fixed bills by hedging the risks of varying demand using weather derivatives.

Where have you heard about fixed bills?

As energy prices can fluctuate wildly, businesses and consumers may prefer the certainty of paying a fixed amount. The issue is often a subject of debate in the personal finance pages of weekend newspapers.

What you need to know about fixed bills.

WeatherWise USA and Christensen Associates are two companies that design fixed bill products and license them to distributors, such as utilities. Alliant Energy, Duke Energy and Nicor are among the energy companies that offer fixed bill programmes directly to consumers.

Fixed bill pricing programmes have been investigated by US State Attorney Generals when participants' bills were higher than nonparticipants' bills. In 2007, Minnesota closed down a fixed bill programme run by Xcel Energy and CenterPoint Energy when most users paid higher than average bills for four out of five years.