What is a fixed price electricity contract?

A fixed-price electricity contract is a type of electricity contract where the price of electricity is constant throughout the contract period. This means that the electricity user pays the same price for the same amount of electricity, regardless of market price fluctuations. A fixed-price electricity contract offers the consumer predictability and stability in terms of electricity bills, which can be particularly useful in terms of budgeting.

Advantages of a fixed-price electricity contract

• Price stability: A fixed-price electricity contract protects the consumer from fluctuations in electricity market prices. This means that even if the price of electricity in the market rises, the consumer will still pay the same fixed price.
• Ease of budgeting: A fixed price makes it easier to predict electricity bills, which helps with financial planning and budgeting.
• Security: A fixed price contract can offer peace of mind because the consumer knows exactly what to expect from their electricity bills.

Disadvantages of a fixed-price electricity contract

• Possible higher price: Fixed-price contracts can be more expensive than market-price contracts, especially if the market price of electricity falls during the contract period.
• Bindness of the contract period: Fixed-price contracts are often fixed-term, which means that the consumer is bound to the contract for a certain period of time. This can be harmful if market prices fall significantly.

Who is a fixed-price electricity contract suitable for?

A fixed-price electricity contract is especially suitable for those who value predictability and stability in their electricity bills. It is a good choice, for example, for families who want to avoid unexpected costs, or for people on a tight budget. On the other hand, if you are ready to take risks and monitor the development of market prices, a market price contract can be a more affordable option.

Summary

A fixed-price electricity contract offers the consumer stability and predictability in terms of electricity bills, but it can be a more expensive option if market prices fall. It is especially suitable for those who want to avoid surprises caused by price fluctuations and appreciate the ease of budgeting. Before concluding a contract, it is important to compare different options and assess your own risk tolerance and financial situation.

Read more about fixed-price electricity contracts On the website of the Energy Agency.