Competition Authority urges caution over electricity package choice

lightbulbs. Source: Siim Lõvi/ERR

Consumers are being advised to be cautious when thinking about changing their electricity package by the Competition Authority after a week of record-high prices.

Consumers can choose between an exchange tariff package, a fixed-tariff package with a contract duration of between six and 36 months, and a package based on a combination of the two, the Competition Authority said on Friday.

Although increases and decreases in electricity prices are difficult to predict, it is worth thinking carefully about all options, such as by using the and electricity price comparison portals. 

The authority said long-term data suggest packages based on free market price have proved more favorable for the consumer than fixed-price packages.

However, it should be noted that a free market package will be more favorable than a fixed-price package if the consumer consistently buys electricity at the free market price over a longer period of time.

At the same time, if the consumer wants to set forth electricity costs more precisely in their budget, this can be done better with a fixed-price package.

Although no definitive conclusions about the future can be drawn on the basis of historical data, recommendations of electricity sellers to choose a fixed-price package have been heard in the media.

A look at the fixed-price packages being offered now reveals, however, that electricity sellers have included a high price of electricity in such packages. A hasty decision can result in the customer concluding an expensive electricity contract for a long period of time.

The bigger share of renewables in the electricity market makes prices more volatile. This means that there are hours when prices are above average, but also hours when prices can be very low or even negative. By consuming more consciously, a consumer who opts for an exchange tariff package has an additional opportunity to save on costs.

This can be done, for example, by knowingly consuming less at higher-priced hours and directing one's managed consumption to lower-priced hours. Flexible consumption can result in major savings. A consumer who has chosen a fixed-price package does not have such an option.

The Competition Authority also recommends that consumers who do not have a valid electricity contract conclude it with a suitable electricity seller. Electricity is sold to consumers without an electricity contract as a universal service, but its price is higher than than the electricity price in any of the price packages available on the market.

At present, nearly 80 percent of consumers in Estonia have an electricity contract and 20 percent get their electricity as a universal service. 


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Editor: Helen Wright

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