The best deal for you depends on what you value. When comparing electricity contracts, in addition to the price, you should think about, for example, your own need for security or financial flexibility.
Exchange electricity seemed expensive, but Paaso expected the price to drop in the summer. The family tried to reduce the electricity bill by scheduling laundry and dishwashing at night. At that time, electricity on the exchange has traditionally been cheap, because the demand is lower.
– In the end, the price didn’t drop much even on some nights. I thought that I had to take a fixed-term fixed-price contract so that I could predict the price a bit.
In the new contract, the family pays the same price for electricity for two years. Paaso is satisfied with his contract, because he noticed that the price of a similar contract doubled the very next day. If the prices drop within two years, the new contract has a clause that allows him to switch to a cheaper contract.
The record high price of electricity has made even more people think about their electricity contract.
Many people want to know what the best electricity contract is right now. The answer depends on what a person considers important.
We gathered together what kinds of things should be considered when making an electricity contract, in order to find the best possible contract for your own finances.
How to compare contracts?
The final electricity cost is affected by the electricity price, transmission fee and taxes. Electricity transmission cannot be tendered, because only one company operates in each region, which takes care of the electricity network.
You can buy electricity from any company. Electricity prices can be compared on the website of the Energy Agency. Therefore, the prices must be checked on the companies’ own websites.
In general, the price of electricity consists of an energy fee and a monthly fee. The monthly fee is the same every month, but the amount of the energy fee depends on electricity consumption. When weighing contracts, you should think about the importance of the basic payment in the invoice.
Fixed-term or open-ended contract?
There are two types of electricity contracts: fixed-term or open-ended. It’s about how long the buyer and seller commit to the contract and the price.
Fixed-term contracts typically last from one to two years. A contract valid for the time being is valid until the buyer or seller terminates it. The contract termination period for the consumer is two weeks.
In fixed-term contracts, the price for electricity is agreed in advance. One option is for the customer to pay the same amount every month. Then the size of the bill does not depend on how much electricity you use – as long as you stay below a certain consumption limit.
Another fixed-price option is to pay for general electricity according to consumption. In this case, a price has been agreed for each kilowatt hour used for the entire duration of the contract. The size of the electricity bill depends only on how much electricity has been consumed.
The buyer cannot get rid of the fixed-term contract in the middle of everything, even if the price of electricity drops significantly. In general, the contract can only be terminated if the customer moves. If the price of electricity rises, the electricity seller has to bear the burden.
It is currently difficult for companies to estimate what electricity will cost in a year or two. That’s why some electricity companies don’t offer fixed-term contracts now. For example, Oomi Energia suspended the sale of fixed-price electricity contracts to new customers last Friday, and Tampere Sähkölaitos has decided to sell only exchange-traded electricity for the time being.
In the contracts valid for the time being, the price of electricity is locked in only for a certain period of time. At the extreme end of this is exchange electricity, where the price changes every hour.
When buying general electricity, the electricity company looks at the price, for example, once a month or four times a year, depending on how the price of electricity lives in the market. If the price is not satisfactory, the buyer can change the contract quickly.
Exchange electricity requires a buffer and attentiveness
Electricity companies buy electricity from the stock exchange, where the price is determined by the law of supply and demand: the more in demand electricity is at a certain time, the more it costs.
Ordinary consumers cannot buy electricity directly from the exchange. Instead, he can authorize the electricity company to buy electricity on his behalf. Then we are talking about a stock exchange electricity contract, where the price changes every hour. More usually, the price is the cheapest at night, when less electricity is consumed.
In addition to the same hourly price for everyone, the customer pays the margin requested by the electricity company and the monthly fee. Hourly electricity prices can be monitored on various websites or applications, for example on the Nord Pool electricity exchange’s own website.
The buyer of exchange electricity does not have to wait all the time with his nose glued to the screen for cheap prices, because the next day’s prices are updated on the website in the afternoons.
Exchange electricity made headlines last winter, when those who bought it reported huge jumps in their electricity bills. At the same time, those who have signed other types of contracts continue to enjoy lower prices.
The situation made many people wonder if stock exchange electricity makes sense anymore.
– The price of electricity on the exchange reacts the fastest to price increases, because the prices are directly based on the exchange. Now we see that the prices of other contract types are also starting to rise. The situation between these contracts is balanced, explains Fortum’s account manager Tuomas Yrttiaho.
If the price of electricity goes down, it will be the first to appear on the bills of those who buy electricity on the exchange.
Historically, exchange electricity has been the cheapest option on average. But the affordability is based on the consumer being able to influence when he uses electricity.
Of course, you shouldn’t turn off the refrigerator for the day. It is also difficult to schedule cooking according to the price of electricity. But you can get electricity almost for free if the household is able to schedule the charging of the electric car or the laundry at night.
The price of stock electricity is now hitting record highs. Its selector requires a buffer. Sometimes the electricity bill may be lower, sometimes significantly higher. The more closely you can follow the prices, the fewer surprises the bill will bring.
Some of the companies offer a price ceiling for the fluctuations of stock exchange electricity. Then the contract is slightly more expensive, but the price cannot rise higher than the agreed ceiling. Now some of the companies have given up the ceilings because the prices have risen drastically.
Can the price of electricity be predicted?
The news constantly ponders what will happen to the price of electricity in the future. Last week it was predicted that the price of electricity will triple during the rest of the year, but in the spring the price will collapse.
The future price is of interest to consumers because it affects what kind of contract is financially viable. If prices continue to rise, it may be safe to commit to a certain price. Even if the prices go down, the customer may be upset if he has committed to paying a higher price.
How precisely can the future of electricity be known and how are forecasts made?
Estimates of the price of electricity in the future are made based on the electricity exchange’s futures trade. In futures trading, electricity is bought and sold in advance. Buyers and sellers of electricity estimate what would be the right price for electricity based on current information.
– In the end, the prices will be affected by whether it will be cold in the winter, how much wind there will be, whether the power plants will break down, whether the transmission connections will work, and what the neighboring countries’ own balance of demand and supply will be.
What if the money is not enough for the electricity bill?
A doubled electricity bill may shake even the most solvent economy. Electricity is not cut off immediately if you forget to pay the bill or if you don’t have enough money. According to the Swedish Consumers’ Association, before the electricity is cut off, the customer is sent a written notice about the overdue payment and a cut-off warning.
Electricity companies recommend contacting customer service immediately if it seems that you cannot pay the bill.
– We understand that now there will be difficult situations. It is a good idea to contact customer service before the due date. Then let’s think about making a payment plan, says Oomi Energia CEO Oksanen.
_You can discuss the topic on 13.8. until 23:00._