What is the difference between a fixed-term and open-ended electricity contract?

Satunnainen

There are many types of electricity contracts, but they are most commonly divided into two main types: fixed-term contracts and open-ended contracts. There are significant differences between these two types of contract, which affect, among other things, the duration, price and flexibility of the contract. In this article, we go through the key differences between these two types of electricity contracts and their effects on the consumer.

Fixed electricity contract

A fixed-term electricity contract is a contract that is valid for a predetermined period of time, usually one to three years. This type of contract offers certain advantages and disadvantages that should be considered before signing the contract.

  • Price stability: In a fixed-term contract, the price of electricity is fixed throughout the contract period. This means that the consumer knows exactly what electricity costs, and there is no need to fear price fluctuations.
  • Bindness of the contract: A fixed-term contract binds both parties throughout the contract period. This means that the contract cannot be terminated before the end of the term without possible contractual fines.
  • Price comparison: Bidding for a fixed-term contract can be more challenging because terminating the contract before the end of the term can be expensive.

Electricity contract valid for the time being

An electricity contract valid for the time being is a contract that is valid indefinitely without a predetermined end date. This type of contract offers more flexibility, but it also comes with its own risks.

  • Flexibility: The contract valid for the time being is flexible and can usually be terminated with two weeks’ notice without additional costs.
  • Price fluctuations: The price of electricity can vary depending on the market situation, which can lead to both savings and additional costs. It is good for the consumer to monitor the development of electricity prices and, if necessary, tender the contract again.
  • Price comparison: A contract that is valid for the time being is easier to tender because it can be terminated at short notice without great costs.

Which contract should you choose?

The choice between a fixed-term and open-ended electricity contract largely depends on the consumer’s own needs and preferences. If you value price stability and are ready to commit for a longer period of time, a fixed-term contract may be a suitable option for you. On the other hand, if you want flexibility and the ability to react to changes in the market situation, an open-ended contract may be a better choice.

You can find more information about electricity contracts and their tendering, for example, on the website of Energiavirasto.

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