MijnenergieFixed, variable and dynamic rates, contracts of one, two, three years or even indefinite duration… The extent to which you are certain of the energy price you have to pay and for what period it applies varies considerably. Moreover, the terminology is not always clear. Mijnenergie.be provides clarity.
By Kurt Deman, in collaboration with Mijnenergie 14-11-23, 20:10 Source: Mijnenergie.be
How ‘rate secure’ are fixed-term contracts?
The most common contracts on the market follow a fixed or variable rate formula.
With a fixed rate with a predetermined term, you know exactly what kilowatt-hour price you pay during that period.
With a variable rate the picture is more complex. The energy supplier uses a formula that it does not change during the term. That formula does follow a certain index, such as the wholesale exchange Belpex for electricity or TTF for natural gas. On a monthly or quarterly basis, the supplier integrates the current index values into its rate formula. If market prices have risen, your energy price will also increase. The same of course applies in the opposite direction. With a variable rate you always have certainty about the formula used, but not about the final price per kilowatt hour.
Anyone who opts for a dynamic rate also opts for a fixed rate formula, but follows the index changes per hour. As a customer, you will then receive an overview of the hourly prices for the next day and can adjust your consumption to the hours with the lowest market prices.
Also read: Why does the price difference between fixed and variable energy rates remain high?
How ‘rate secure’ are contracts of indefinite duration?
With an indefinite-term contract – a total of twelve different rates on the energy market – the supplier can change the price and therefore the tariff formula at any time. He must inform you of this in advance.
Some contracts of indefinite duration do give the customer certainty about (part of) the price. When we analyze the permanent contracts for an indefinite period, it turns out that all providers offer their customers price certainty for one year.
Comparing pays off: This energy supplier’s new fixed electricity rate is immediately the cheapest on the market.
Conclusion
In practice, energy suppliers do not often use the option to adjust their rates for current contracts. This often happens for new contracts and extensions. The rate formula that an energy supplier advertises for new customers may therefore look different from the rate formula on your contract, even if it is a rate with the same name.
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This article was brought to you by our partner Mijnenergie.be.
Mijnenergie.be is an independent energy price comparator of electricity and gas offers.
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2023-11-14 19:10:00
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