Electricity customers with fixed-price electricity contracts typically pay more than necessary – even in the most expensive months of the year. A new calculation by the energy company OK shows that variable electricity contracts are cheaper in most cases, even when electricity prices are high. The energy company states this in a press release.
The calculation shows that the average electricity price in the first three months of the year was DKK 0.92 per kWh incl. VAT in DK1, while fixed-price contracts cost an average of DKK 138.16 per kWh incl. VAT. This means that there is a significant difference between the two contract types, even in a period characterized by winter and geopolitical unrest.
- The first three months of the year have featured both a harsh winter and great geopolitical unrest. Yet customers with a variable electricity contract have received electricity cheaper than those who pay a fixed price. And that difference only becomes even greater in the summer months, when we get very cheap electricity for long periods, says Christian Ruhe, director of Energy & Housing at OK.
The price for security is too high
According to the calculation, customers with fixed-price agreements pay in the vast majority of cases over DKK 1 per kWh, while variable agreements follow the market price with a surcharge or subscription. This means that there is still a significant price gap between the two models. OK believes that fixed-price agreements are generally not worth it for private electricity customers, even though they provide predictability in the electricity bill.
- Several electricity companies market fixed-price agreements as security for customers. And it is also true that you know what you have to pay. But the price is just too high for that security. In OK, we do not offer fixed-price agreements to private individuals because we do not believe that it is a wise choice for electricity customers, says Christian Ruhe.
The Danish Consumer Council Think also generally recommends variable electricity agreements. A review of 1,500 electricity bills shows that fixed-price agreements are often the most expensive solution in the long term, because prices are set so that the electricity companies ensure an income.
In addition to not being economically attractive to consumers, fixed-price agreements can also negatively affect the electricity grid. When the price is fixed, customers have no incentive to shift their consumption to times with high production of renewable energy, which can increase the load and lead to greater use of energy from gas-fired power plants.
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