July 12, 2024

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Concluding an energy contract with a fixed or variable price: pure gamble or an informed choice?

Concluding an energy contract with a fixed or variable price: pure gamble or an informed choice?

“We can’t stress enough that there is a huge difference between a fixed price contract today and the expected price you would pay with a variable contract. Suppliers have seen how quickly prices can rise,” Claeys explains on Radio2 Spits. “If they offer you a fixed price, they have to take that into account. So, an amount at risk is added to your contract. That risk is high and so is the amount. With variable-price contracts, suppliers are exposed to less risk,” he said, “so there’s no big problem.”

The difference between the variable rate and the fixed rate is now €400 on average in one year. “But this spread can vary greatly from today to tomorrow. With a fixed-rate agreement, you pay more just to cover yourself against this risk. If prices suddenly rise too quickly and too much, you are more or less safe with your fixed rate.”

“The main reason to choose a fixed price is that you are buying that certainty. People are willing to pay more and thus put risk on the supplier. There is one big ‘but’: you should not choose a fixed price when prices are high.” “Very high. Because if it goes down again, you will still pay a lot.”

See also  The price of fixed energy is up to 300 euros more expensive than the variable alternative: what explains the price gap? | Energy prices