What’s going on with gas bills? Should you pick a new contract now?
An increasing number of energy companies are again offering fixed contracts to consumers because the price of gas and electricity has been falling.
Essent, Budget Energie and Vandebron are among the firms now offering fixed contracts of up to a year, while Eneco, United Consumers and GreenChoice are all offering them for six month periods, according to research by comparison website Energievergelijk.nl.
‘A fixed contract for a year offers the most security at the moment,’ said the website’s Bart Koenraadt. ‘In 2024 the government price ceiling will have ended and you will again be at the mercy of your energy firm’s prices. And should they rise again in the future, you will at least benefit from fixed fees in the first three months of next year.’
In addition, the top five annual deals currently on offer are all below the price ceiling of €1.45 per cubic metre of gas and 40 cents for a kilowatt hour of electricity, Koenraadt points out.
The six-month contracts currently on offer are also extremely sharply priced and could be a good idea if you are planning to shift to a new provider in the near future. You could then wait until October, when prices may have come down even further, to make a deal.
Prices are going down
After all, a fixed contract is only beneficial at the moment if energy prices are going to rise. But this, the Energievergelijk research suggests, may well not be the case. Gas prices are falling slightly, the European gas reserves are well filled because of the mild winter, and plenty of new sources of gas have come on the market.
The Economist Intelligence Unit (EIU) is also forecasting that gas prices are more likely to fall than go up. In other words, says Bart, a variable or dynamic contract might be preferable to a fixed one, but if you are after security, a fixed contract of a year is your best bet.
Types of contract
There are currently three types of energy contracts you can chose from: a fixed contract, a variable contract and a dynamic contract. A fixed contract runs for a longer period – currently six months or a year – and gives you security about how much you will pay.
The price of energy in a variable contract will change after a fixed period, usually every month or quarter, but sometimes every six months.
A variable contract is a good option if you are more concerned about having a cheap deal than security about how much you will pay – and is also beneficial to solar power panel owners who feed a considerable amount of electricity back into the system.
In a dynamic contract, the price you pay for gas and electricity varies along with the energy markets. The size of your bill will depend on what you pay in a given day. Energy prices are typically higher, for example, between 07:00 and 09:00 and 17:00 en 21:00.
A dynamic contract could be your best bet if you want to benefit from falling energy prices, if you are super aware of your personal usage and if you don’t mind paying different amounts all the time.
Use this handy tool (in English) to check out the differences
The option you chose depends on both your personal situation and your attitude to risk, says Energievergelijk’s Koen Kuijper.
‘If we assume that energy prices will remain relatively low, and may even fall somewhat, then that means suppliers can buy in energy more cheaply and offer it against lower charges,’ Koen says.
‘A variable or dynamic contract, which allows you to profit more quickly from lower prices, would be the most sensible option in many cases. But a fixed contract gives you more certainty, and that is something a lot of people consider important, given the current economic climate.’
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