Variable Price Contracts

2 min read
Section 1
26 November 2018

What is the variable price electricity tariff? Variable electricity price can also be referred to as “standard variable price” and has previously been the most popular and remains one of the most common power contracts in Norway. Standard variable electricity prices follow a certain degree the spot price and therefore depends on the needs in the market. The difference between spot price and variable price tariff is essentially that suppliers are required to inform their customers if there are changes in the price at least two weeks in advance. That is, the variable electricity price follows the market to some extent with a delay of two weeks, as customers will be informed of what the price will be. Since prices are constantly changing and suppliers need to inform in advance, there will be a delay in the prices the customers pay to the suppliers in order for pricing to be correct in connection with prices on the power exchange. Although the price follows the market demand to some extent, it is still the suppliers who decide the price. The price you pay does not change from day to day as with the spot price but is based on an agreement with the suppliers that the price changes periodically and the price will, therefore, be the same until two weeks after the suppliers have notified a price change. In essence, the variable electricity price is somewhere between a spot price agreement and a fixed price agreement, as it does not vary as much as the spot price but is still less fixed than the fixed price. This may seem unfavorable in the summer if the spot price drops but will quickly pay off in the winter as the spot price will be adjusted at a higher price from day to day as suppliers cannot follow the variable price agreement with immediate effect. If you have a variable electricity price agreement and see that the price on the market is higher than the one you pay, you can still be sure to pay the lower price for a while until the vendors notify you of any price changes that match the market. The variable electricity price agreement provides predictability for the prices of customers over a longer period of time since you are always informed in advance of what the price will be and can to some extent control its consumption after that. The total variable electricity price is also determined by how the competition between the suppliers is taking place. That is, there is an additional cost in addition to the price the suppliers buy into the flow for which is based on the competition between the suppliers. Variable power price has no connection time, so you can always switch power agreements if it does not suit the consumption and lifestyle you have. It also provides more predictability for how the electricity bill will look from month to month. This power agreement is best for those who want predictability and notification of price changes from the suppliers and therefore also get an overview and more control over power costs. A variable electricity price agreement usually requires Direct debit or e-invoice agreement.

[Totalt: 10 Gjennomsnittlig vurdering: 4]