Fixed contracts for gas and electricity are now back as a serious option. So would this be a sensible move for you?
With summer now with us, the cost of central heating and cooking warming winter stews may seem like an irrelevance. But the rates currently on offer for a fixed annual contract are less than the price cap offered by the Dutch government and that means there are good deals to be had.
Switching to a new fixed-year contract will give you certainty about how much you will pay in the coming months and the first few months of 2024, once the price cap has ended, points out Independer’s energy expert Joris Kerkhof.
Comparison websites such as Independer have noticed a flurry of interest in the run up to the introduction of new rules covering cancellation fees which have just come into effect.
Up until June 1, people who wished to switch contracts had to pay their supplier a fine of up to €100 at the most for loss of income. Now, however, the fine will be equal to the actual loss that your supplier will make because you have ended the contract early, and that could add up to several hundred euros.
For most people, however, there will be no fine if they decide to opt for a permanent contract. “Switching is easy and costs you nothing in most cases,” says Kerkhof. “You only pay a cancellation fee if you have an existing permanent contract and want to move to a new one.”
Many consumers, however, don’t realise their fixed contract is expired and they already have a variable one by default. “This means they can switch immediately free of charge and don’t have to worry about the high fines,” Kerkhof points out.
As well as the new system for calculating fines, consumers must also be aware of the current drop in gas and electricity prices, prompted by energy savings, large deliveries of LNG and the mild winter. In fact, the price of gas on the Dutch market is now back at the level it was in October 2021.
“Your energy provider should have already informed you about the new prices you will face in the months ahead and many consumers are asking if now is the right time to opt for a new fixed contract,” Kerkhof says.
If you want to lock in stability, then there is a wide range of annual contracts on offer. Check out a comparison website like Independer to find out which one would suit you best. If you can wait a little longer, Kerkhof says contracts covering two, three and even five years may well be on offer shortly.
“This is a decision you have to make for yourself,” says Kerkhof. “If you wait, prices may drop further and the supply of permanent contracts could increase. But it is impossible to rule out a rise in prices either.”
“Be aware that if you opt for a long-term contract, prices will be higher because you pay more for certainty,” he said. “If you want the lowest possible price, switch to a dynamic contract which can change by the day.”
In the long term, it is very difficult to say what will happen to gas prices, Kerkhof says. “We don’t expect gas prices to go down to the level of 2020 because LNG is more expensive than natural gas,” he points out. “But the situation in Ukraine remains very unstable and a cold winter would also have a major impact.”
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