Understanding Energy Contracts: Fixed vs. Variable Pricing – Pros and Cons

2023-10-05 12:43:56

It is impossible to answer this question but:

With a variable, the supplier does not take any risk: he makes you pay for the energy at the price he purchased it, taking into account his operating costs and making a profit.

With a fixed, he takes a risk: you will continue to pay the same price, even if the supplier buys this energy more expensively. To set the price, the supplier therefore estimates the probable evolution of the price over the contract period and applies a sort of “risk premium”.

It means that if wholesale prices evolve according to forecastswe will always pay cheaper with a variable contract. However, if the price explodes, the fixed contract protects you and will then prove more interesting.

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