Can the price of electricity decrease during the contract period?

The price of electricity is a significant cost item for many households and companies, and its fluctuations can significantly affect the financial situation. One common question is whether the price of electricity can decrease during the contract period. The answer to this question depends on several factors, such as the type of contract, the market situation and the terms of the contract.

Types of contracts and their effect on the price of electricity

There are several types of electricity contracts, and they can be divided mainly into two categories: fixed-term contracts and open-ended contracts.

• Fixed-term contracts: These contracts are valid for a certain pre-agreed period, for example a year or two. In fixed-term contracts, the price of electricity is usually fixed throughout the contract period, which means that the price does not change according to the market situation. This provides the consumer with predictability and protection against price increases, but on the other hand prevents them from benefiting from possible price drops.
• Contracts valid for the time being: These contracts are valid for an indefinite period and can usually be terminated with short notice. In contracts valid for the time being, the price of electricity may vary depending on the market situation, which means that the price may decrease or increase during the contract period. This type of contract offers flexibility and the opportunity to benefit from falling market prices, but on the other hand exposes the consumer to rising prices.

Impact of the market situation

The price of electricity is largely determined by the market situation, and it is affected by many factors, such as fuel prices, weather conditions, the balance of supply and demand, and political decisions. For example, an increase in renewable energy sources can lower the price of electricity, while an increase in the price of fossil fuels can increase it.

Contract terms and price revisions

Some electricity contracts may have terms that allow the price to be revised during the contract period. For example, in contracts that are valid for an indefinite period, the electricity seller can announce price changes in advance, and the consumer then has the option to terminate the contract if the price change is not to their liking. It is important to read the terms and conditions carefully and understand under what conditions price changes are possible.

Summary

Can the price of electricity decrease during the contract period? The answer depends on the type of contract and the market situation. In fixed-term contracts, the price is usually fixed, so it does not change during the contract period. In contracts valid for the time being, the price may vary depending on the market situation, so it may decrease or increase during the contract period. It is important to understand your electricity contract and its terms in order to make the best possible decisions when purchasing electricity.

You can find more information about electricity contracts and the formation of electricity prices, for example, on Energiavirasto’s website.