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The Estonian Competition Authority advises consumers to be careful when changing the electricity package

The Estonian Competition Authority advises consumers to be very careful when changing the electricity package. The price of electricity has been very high in the last month, rising above 130 euros per megawatt-hour (MWh) on several days. It is important for consumers to assess whether the chosen electricity package is the most affordable and whether they can do something to use less electricity. The consumer can choose a package based on the stock exchange price, a fixed price package (contract length from six months to 36 months), or a combination package (stock exchange and fixed price package). Even though it is difficult to predict the increase and decrease of electricity prices, the consumer should think carefully about all options and consult, for example, electricity price comparison portals (elektrihind.ee and energiaturg.ee).

The authority has monitored changes in the prices of electricity and according to historical data, packages based on the stock exchange price have turned out to be more affordable than packages based on a fixed price. However, it should be noted that a stock exchange package becomes more affordable than a fixed package if electricity is bought at the stock exchange price for a longer period of time. At the same time, if the consumer wants to calculate electricity costs more accurately in the budget, a fixed-price package allows planning the budget better. Although no specific conclusions about the future can be drawn based on historical data, the recommendations of electricity sellers to choose a fixed-price package have been advocated in the media. The authority has also looked at the current price levels of fixed-price packages and concluded that electricity sellers have already accounted for the high price of electricity in these packages. A rushed decision can lead to the conclusion of a long-term expensive electricity contract.

The larger share of renewable energy in the electricity market makes the prices more volatile. This means that during some hours of the day, the prices are higher than average, but there are also hours where the price can be very low or even negative. With more conscious consumption, the consumer who has chosen a package based on the stock exchange price has an additional opportunity to save money. This is possible, for example, by consuming less during the higher-priced hours and reserving your controlled consumption for lower-priced hours. That way, flexible consumption can lead to considerable savings. A consumer who has opted for a fixed price package does not have such an option.

The 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 in any electricity price packages offered. Today, almost 80% of consumers have an electricity contract and 20% of consumers buy electricity as a universal service. Finding a suitable electricity seller can certainly help you save money.

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