Electricity contracts are sold under partly misleading trade names. The actual terms of the agreements may have come as a surprise as the price of electricity has risen, writes financial journalist Anni Lassila in her analysis.
Helsinki the customer received mail from Fortum at the beginning of the year. The price of the customer’s electricity contract called Fortum Standard would increase by a total of 15 percent from the beginning of February.
The customer was amazed as he had imagined buying a fixed price electricity contract. But no, the standard name doesn’t even refer to a fixed price for a fixed period. It only means that the electricity bill is divided into equal monthly installments.
By clicking further on the terms of the electricity contract on Fortum’s website, it becomes clear that the company may change the price at any time with one month’s notice. When the price of electricity has risen sharply in the market, the company has ended up making the increase.
Multi the rest of the electricity buyer has learned the real terms of his electricity contract through the heel during the winter. Exchange prices for electricity have been exceptionally high since the autumn, partly due to the tense energy situation in Europe as a whole.
At the beginning of December, prices rose to record levels. The most expensive hourly price for the next day on the power exchange was as high as 1.20 euros per kilowatt hour, when the average price has usually been 4–6 cents.
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As prices rise, most buyers of exchange-traded electricity tend to switch their contracts quickly to a fixed-term contract with a fixed price.
At that point, it came as a surprise to many that some of the companies had a fixed-term electricity contract. In other words, stock exchange electricity, which has risen to peak prices, has only been eliminated if the electricity company has agreed to terminate the contract prematurely.
Some companies ended up doing so.
For many customers were also shocked that it took two weeks to change their electricity contract.
Thus, the exceptional stock prices in the first two weeks of December will bring an additional bill of hundreds of euros to some heaters in a single-family home, even if the consumer woke up to change contract at the beginning of the month.
After the beginning of December, it became clear that even by changing the contract, high prices would not be completely escaped. Electricity sellers buy the electricity they sell on the market through derivative contracts, so the rise in stock exchange prices was quickly reflected in the prices of all electricity contracts.
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During the winter, many power buyers have learned the true terms of their electricity contract through the heel.
Problem applies to non-exchange buyers. Among other things, those customers whose previous two-year electricity contract happens to expire this winter.
Only more than twice as high prices are now available. Buying electricity with a two-year contract at a price of more than ten cents per kilowatt hour is sure to terrify at least an electric heater.
However, for some electricity sellers, a fixed-term contract may be accompanied by the right to switch to a cheaper contract if and when prices fall. The price of the exchange option is a few euros per month.
Part even large electricity sellers had to suspend the sale of fixed-term contracts altogether due to the tightening of the electricity futures market.
For example, last week Oomi sold only contracts tied to the stock exchange price. Even a two-year fixed-term contract is available, but it will not be valid until the beginning of April.
Traditionally, most customers have purchased their electricity at the current price. The electricity company may increase it with one month’s notice. Now the increases can be drastic.
For example, Kymenlaakso’s electricity will increase the price of general electricity for current customers from 7.11 cents in December to as much as 18.99 cents at the beginning of February.
What kind of electricity contracts are available, and what to choose now?
In general the range of electricity contracts available has narrowed markedly as prices have risen. HS went through supply last week.
The price of exchange-traded electricity has fallen from the peak prices in December but is still clearly higher than in the last couple of years. On Friday, a kilowatt-hour cost 16 to 25 cents during the day, depending on the hour.
A few companies seem to be able to offer standard electricity contracts for the time being. That is, those with a price / kWh and consumption is paid for each month according to actual consumption. The company may increase the price with one month’s notice.
Specially there are so-called standard contracts for apartment dwellers, in which the same amount is paid each month, as long as consumption remains within certain limits.
The alternative may be suitable for a low-consumption apartment building, but you must be careful with the use of an electric sauna. Kilowatts going beyond the contract limit can be expensive.
A wide variety of temptations have been baked into standard contracts. There is a student discount and other offers.
With some companies, home insurance can also be packaged in the electricity contract. The product may be popular with young people when there may not be another insurer yet.
Different price supplements can ensure that you only buy solar electricity or only wind electricity. In any case, the majority of Finland’s electricity production is emission-free.
Standard contracts the calculated price per kilowatt hour is quite high. However, there is no separate basic fee.
In any case, for an apartment building, the electricity bill is usually a rather small item of expenditure, so there are usually no more than a few dozen to lose or win. Prices for standard contracts are subject to change, usually with one month’s notice.
Many companies offer also one-month or three-month price contracts where the bill comes according to actual consumption but the price per kilowatt hour is fixed.
Currently, the prices of these contracts are quite high. Pricing follows market prices, so prices go down if market prices go down.
On the electricity bill it is possible to influence the supplier and price of electricity yourself. The electricity transmission service is always purchased from the company whose network you live in. The transfer price cannot be competed.
There are several services available online to compete for electricity. You should be careful when using them. The price quoted in the comparison may only be the first month’s price or some other fixed-term offer.
Many electricity traders are clearly deliberately trying to mislead the consumer.
There are so many different products and offers in general that it can be difficult to compare for a cent. The simpler the product, the easier the comparison.
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At least electricity can be purchased from Helen with a contract valid until further notice
Power the price is of great economic importance to those who use electricity to heat their homes and domestic water. For example, a geothermal system also consumes so much electricity that the price of electricity matters.
Is it worthwhile for an electric heater now to have a fixed-term contract, albeit a little expensive, or to believe in the long-term benefits of exchange-traded electricity?
At some point, stock exchange electricity will again become a profitable option if it is possible to shift consumption to affordable hours of the day. If there are any.
Often, a fixed-price contract can also include a different price for night and day use if you are able to take advantage of the night hours.
My visits Based on the discussions, many electricity market professionals have persevered in the stock market electricity this winter as well, in part perhaps for reasons of principle.
From the point of view of the electricity system, it is advantageous if as many users as possible pay for electricity at an hourly price and, if possible, shift their consumption to hours of low demand and low prices.
In this situation, a compromise solution suitable for an ordinary electric heater that values risk management may be a fixed-term contract and, in addition, an Exchange Option.
At least Electricity can still be purchased from Helen with a contract that is valid for the time being, and at least last week the price was cheaper than with a two-year contract. However, the price may rise.
An agreement valid for the time being may be exchanged for any other agreement with two weeks’ notice.
In this way, there is no need to commit to high prices if the market situation changes and prices fall.
With worn out During the week, the average taxable price of electricity has been 11.4 cents per kilowatt hour.
Intra-day price fluctuations have been huge. During the day, the hourly price of electricity has fluctuated by as much as 30 cents, while the price of the morning night has been at its lowest by only a few cents.
How much you can benefit from inexpensive hours depends on the heating system.
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