Fixed power contracts are available again, but not for everyone

Fixed power contracts are available again, but not for everyone

They’re back from a (temporary) absence: energy contracts whose price is fixed for a long time. Due to the energy crisis these were not available last year, but now that gas prices are down somewhat this is slowly starting to change.

At the moment, suppliers are only offering them on a small scale, but there will likely be more in supply in the coming months. It may be beneficial for many people, experts say.

energy crisis

Russia’s invasion of Ukraine has thrown the energy market into crisis: Russia has withdrawn from being a major supplier of gas, causing prices to rise rapidly. This made it impossible for suppliers to offer permanent contracts. Because the prices they will charge for it will be very low again soon.

So people who wanted to enter into a new energy contract had to rely on variable contracts whose price was adjusted several times a year. Prices have skyrocketed for many families in the past year. The Cabinet came up with a price cap to help them.

But now that gas purchase prices are down, suppliers are once again daring to offer permanent contracts. “For example, there are already a number of one-year fixed-price contract offers,” says Hans de Kok of price comparison site Pricewise.

Energy contract prices are also falling at the moment. “We expect rates to fall below the price ceiling level,” says de Kock. For anyone with a variable contract, this can quickly bring down their energy bill.

Whether switching to a permanent contract is beneficial depends on many factors. For example, a fixed power contract (for a period of one year) is not yet available to everyone. It is only available from small suppliers Mega, Innova and HEM. But, says de Kock, “they only buy a limited amount of gas, and that means they can’t offer everyone such a contract within a long time. The rule is: go.”

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The companies said that Essent and Vandebron recently began offering permanent contracts again, but only to some of their clients. news hour. De Kock: “The energy market is still turbulent, so they’re only selling fixed contracts to a certain group specifically.”

If you belong to that select group, it might “definitely be interesting” to opt for that flat-rate at a relatively low price, says De Kok. “The price cap only applies to this calendar year, 2023. If you choose a flat rate for one year now, you also have a flat rate after that.”

Higher conversion fine

Suppliers are still cautious with perpetual contracts because the market is “not very stable yet,” says energy economist Hans van Cleef. “Because gas stocks are so well filled, prices are much lower than they were last summer. But market uncertainty is still very high.”

Van Cleef says Europe’s ability to keep its gas supplies full depends to a large extent on China. “Last year, we were able to buy a lot of LNG and LNG, which was already going to China. Because China was in lockdown and the economy was not running smoothly. But now that the economy is starting up again, there is automatically less than The LNG available to Europe then a shortage could arise, which in turn would drive up prices.”

Now you can often get a permanent contract for about 50 euros per product (gas and electricity). The new rules should prevent all customers from switching to a cheaper contract in the event of a sudden price drop. And then the energy company will be left with expensive purchased energy and may collapse. De Kok advises people to consider switching “while termination fees for fixed-rate contracts are still relatively low.”

Chance of lower prices after 2025

Energy economist Van Cleef expects energy prices to remain relatively high in the coming years. This is mainly due to the decrease in the total supply of gas because Russia is no longer a major player.

Until 2025 or 2026, he says, “it will still be a very tight market with higher price risks.” “In 2025, some large gas projects will be available, especially in Qatar. In addition, sustainable energy sources and existing efforts to use energy more efficiently will really begin. And then there will be more air on the market.”

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