Eesti Gaas, Alexela advice differs on fixed natural gas domestic contracts

A gas hob.
A gas hob. Source: Priit Mürk/ERR

Fuel retailer Alexela recommends considering a fixed price contract for natural gas to domestic consumers, in the wake of the current fall in prices. However, Eesti Gaas, the market leader, counsels the opposite, on the grounds that the current prices are still high even as they are falling.

Eesti Gaas announced on Wednesday that it will significantly reduce its sales price of natural gas. From July, this will be €0.46 per cubic meter inclusive of VAT. 

Alexela announced a price cut the same day, to €0.45 per cubic meter.

Alexela informed its customers at the same time that futures are pointing towards an increase in natural gas prices starting from October, meaning that to stabilize budgets, domestic consumers could start setting their price ahead of the heating season – which while it may feel as If the last heating season has barely ended in Estonia, traditionally begins on October 1, ie. seventeen-and-a-half weeks away.

According to prices quoted on Alexela's website, domestic gas can be fixed at €0.65 per cubic meter for a period of one year.

However, Eesti Gaas' stance is the diametric opposite. Kersti Tumm, the company's communications manager, told ERR that fixed prices will be high if contracts are set now, so Eesti Gaas does not recommend doing so. 

Furthermore, Eesti Gaas have not opened the option of fixing prices online in any case, though it is still possible to do so via the customer service phone line.

Tumm said: "A 24-month fixed contract can be set up, though at an even higher price than for 12 months, so therefore we would prefer the client consult on this issue before making an informed decision."

As of Wednesday, Eesti Gaas' customer service offered the option of setting a fixed price for 12 months from July 1; in this case natural gas costs €0.69 per cubic meter inclusive of VAT.

Furthermore, when terminating fixed-term contracts early, a penalty is due, though neither company was able to state what this was.

Marit Liik, Alexela's communications manager, told ERR that: "Each contract has its own individual consumption profile, with its own conditions and agreements, so it is not possible to state universal conditions. If the customer wants to fix their price, we already agree on that in the contract," said

Until the end of April, Eesti Gaas' flexible package for natural gas to domestic consumers cost €0.74, then from May 1 the price dropped to €0.69 euros, from June, € 0.64 per cubic meter (all prices inclusive of VAT).

At Alexela, the natural gas variable package already stood at €0.68 per cubic meter from April, the same price was also valid through May, while in June it had dropped to €0.63 per cubic meter.

The price of gas on the Netherlands gas futures exchange TTF rose to a record high at the end of August last year, when the price per megawatt hour stood at €320. 

The peak price for Eesti Gaas was €2.85 per cubic meter of natural gas, posted last fall.

This week, the TTF futures price has largely remained below the €25-per-Mwh mark.


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Editor: Karin Koppel, Andrew Whyte

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