Consumers are advised by some experts to consider fixing their electricity prices, to avoid potential hikes.

There are two main types of electricity packages available in Estonia: Market-based and fixed-price.

Fixed-price packages are further divided into two types: Those with no penalty for early termination and those with a penalty for canceling early.

Currently, most providers offer fixed-price contracts for six months only, and few allow early termination without a penalty.

For instance Eesti Gaas does not currently offer any contracts without early termination penalties, while other providers offer such contracts only for six months.

Tarmo Kärsna, head of energy sales at Alexela, explained that longer contracts without penalties were considered too risky for providers until 2021, at a time of soaring energy prices, when a legal right to agree on termination fees was introduced.

He said: "The interim universal service changed the market, allowing clients to terminate long-term contracts without penalties."

"Six-month contracts are short enough for providers to manage market risks, but clients generally don't sign them because the price is higher than for longer contracts," Kärsna went on.

Meanwhile Sander Randver, head of energy products at Enefit, said that his company also only provided contracts without early termination fees for a six-month period.

He added that these contracts had been available for longer periods until spring 2022, but market conditions made longer-term contracts less viable.

"The market situation has changed, and price fluctuations are harder to predict," Randver noted.

Current pricing for fixed-price packages

The most affordable fixed-price package without a termination fee is Alexela's Pingevaba package, which costs 12.48 cents per kilowatt-hour.

However, the price is fixed monthly, meaning it fluctuates month-to-month.

For packages with a truly fixed price, Elektrum offers the most affordable options with an average unit price of 14.14 cents per kilowatt-hour and a monthly fee of €1.88.

In October, the Väikse Klõps package from Elektrum dropped to 13.93 cents per kilowatt-hour, down from 15.8 cents in September.

In third place is Enefit's Kindel 6 package, at 14.41 cents per kilowatt-hour with a €2.02 monthly fee.

Randver explained that fixed-price packages are more expensive because they are based on electricity futures contracts, and risks have increased since the energy crisis.

"In Finland and Sweden, electricity prices can be up to 40 percent cheaper than in Estonia," he said.

Penalties for early termination of long-term contracts

For longer-term contracts, early termination can lead to significant penalties.

Eesti Gaas' Kindel package has prices ranging from 11.54 to 11.84 cents per kilowatt-hour, depending on the contract duration.

However, early termination of this 36-month contract incurs a penalty of up to 50 percent of the unused electricity cost.

Similarly, Elektrum's Kasulik Klõps package, with a daily rate of 12.30 cents per kilowatt-hour, charges a penalty of €720 for early termination, decreasing by €20 for each month elapsed.

Alexela's 36-month package also charges a €720 penalty, which also falls by €20 each month.

Kärsna confirmed that Alexela has not increased its penalties in the last six months.

When signing a fixed-price contract, the provider commits to buying electricity in advance at the agreed price.

"If the client wants to terminate early, the provider must resell the electricity purchased in advance," Randver said. "If the market price is lower at the time of resale, the provider incurs a loss, which the terminating party must cover."

The penalty amount depends on when the contract is terminated and the client's consumption.

Randver clarified that Enefit charges the penalty only when a real loss occurs.

Given the uncertainty of market conditions, some experts suggest considering a fixed-price contract.

However, Kärsna argues that a market-based package may ultimately be cheaper in the long run.

Editor's note: Please note that the above price information was as of November 29, 2024.

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