Electricity - Glossary
Fixed-price electricity contract
An electricity contract where the energy price (cents/kWh) stays the same throughout the term, typically 1-3 years.
In a fixed-price electricity contract the energy price (cents/kWh) is agreed in advance and stays unchanged for the whole term. The term is typically 1, 2 or 3 years. The fixed price includes the supplier's estimate of future market prices and a risk premium.
A fixed contract suits consumers who value predictability and want to be shielded from price spikes. Especially for high-usage homes (detached houses, electric heating) it can bring peace of mind during cold winter months. On the other hand, in the long run a fixed contract is typically more expensive than spot-priced electricity, because the price includes a risk premium.
A fixed contract is for a fixed term, which means commitment. If market prices fall significantly during the term, a fixed contract can turn out to be markedly more expensive than spot-priced electricity.
Compare electricity contracts
Compare electricity contracts and find the cheapest option
Related concepts
Spot-priced electricity
An electricity contract where the price varies by the hour according to the spot price on the Nord Pool power exchange.
Comparing electricity contracts
The process of comparing different suppliers' offers to find the most affordable electricity contract.
Margin (electricity contract)
The premium added by the supplier on top of the spot price in a spot-priced contract, typically 0.25-0.99 cents/kWh.
Frequently asked questions
Is a fixed contract more expensive than spot-priced electricity?
In the long run, yes - the fixed price includes a risk premium. In the short term it can be cheaper if spot prices rise exceptionally high.
Can a fixed contract be terminated?
A fixed-term contract usually cannot be terminated without fees. An open-ended fixed-price contract can be terminated with 14 days' notice.
How do I choose the length of a fixed contract?
A shorter (1-year) contract gives flexibility, while a longer (2-3 year) one locks in the price for longer. If market prices are low now, a longer contract can be a good deal.