Fixed Electricity tariffs

3 min read

What is fixed electricity plan?

Fixed price on power is an offer to pay a fixed electricity price each month regardless of the market needs, which season it is and the grades on the scale. Suppliers calculate the fixed price by taking into account that electricity prices are constantly changing, and the price will therefore be somewhat higher compared to the price per kWh calculated by Norpool. This is due to the fact that suppliers will have the opportunity to earn money on the agreement and secure against losses if it turns out that the fluctuations are greater than expected. But here they also risk if it appears that the electricity prices are higher than they have included in the calculation, and you as a customer will be able to make sure that the calculation has been made from a starting point at lower prices. If you do not want to worry about electricity prices and want predictability throughout the year, it’s advisable to look at fixed price deals, although in most cases this will be the most expensive deal, compared to the spot price deal. When choosing a fixed-price agreement, you should also make reservations about your own living situation. Fixed rates are favorable for those living in large houses and older buildings where the need is higher than in well-insulated apartments. It also pays for people with a tighter economy and who can not afford big fluctuations on the power exchange. But one should not be wondering that the agreement is called fixed price. Please note that fixed price does not mean a fixed amount of electricity bills every month throughout the year. What is meant by fixed price is that the price per kWh is fixed and the amount of electricity bill will therefore reflect the consumption that has been consumed during the month. That is, even if you have a fixed-price agreement, for example, the electricity bill will still be higher during the winter months than during the summer months when consumption and demand are naturally higher during this time. However, the price paid for each kWh consumed will be the same throughout the year. The choice of fixed price means that suppliers do not have the opportunity to change the price paid per kWh no matter how prices change on the power exchange so all you need to watch as the consumer is how many kWh you use to get an overview of how the electricity bill will look. Note that by entering into a fixed price agreement, there is a term of binding of normally a certain number of months or one or more years. This is because a customer must be faithful for a certain period of time against the suppliers giving a fixed price all year regardless of how prices change on the market.

Advantages and disadvantages of fixed price power agreements

If you are still unsure whether the fixed price deal is for you, check out our list of advantages and disadvantages of the fixed price power agreement:

Benefits

  • Save money in the long run, and peace of mind that the price rises will not affect your household
  • Having choices – There is a wide range of Fixed-price deals, so you can easily find the one that suits you best with or without breakage fees.
  • Supplier Selection – Almost all Power Providers now offer a fixed price agreement, and you can quickly compare the fixed price agreement from multiple vendors.
  • Still getting a competitive electricity price

 

Disadvantages

  • Some right price (However, you can find deals that do not have a cancellation fee, so you can trade if prices drop)
  • Breakage fee / cancellation fee. These may vary between 250 and 2000kr to swap the contract expires.

 

Should I switch to a fixed price deal?

Still not sure if you want to take the chance? It may be about how your current financial situation is and how often you expect to be able to compare the energy market for better deals. If you are comfortable paying any right price now for protection in the future, you should compare fixed price deals. You can compare power deals to see if you can get a better power deal. Then check which of these are fixed price deals.

What should I do when my fixed price agreements expire?

It is important to know that when your fixed price agreement ends and you do not proactively switch to a new agreement, the vendor will roll you on to its default agreement, which is often one of the most expensive.

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