All the media talk about this: energy prices rose sharply in 2021 due to the resumption of post-containment activities. For thousands of households arriving in their contract, this is the time to switch tenders or suppliers. But when comparing your options, you block: should you opt for a contract at fixed price or at variable price? What is the difference between the two? Which one best fits your energy consumption profile?

If you recognize yourself in this layout, is that you have arrived at the right place! We’ll explain everything to you for these two types of pricing. After that, you’ll be suprised to do the most suitable choice for your situation when you change your contract Energy.

>> Read also: The ultimate guide to entering into its first energy contract

What is a fixed-price energy contract?

If you choose a Electricity or Gas Contract at a fixed price, this means that the price you pay per kilowatt-hour (kWh) will always remain the same throughout the entire contract. This ensures a stable price over a defined period (often one year or three years). This is the security option.

What is a variable price energy contract?

Contrariumwith a energy contract at variable rate the price of the kilowatt-hour you pay will be indexed every month or every three months based on a specific index.

For example, for gas, the majority of suppliers use the TTF103 index (quarterly reference index for gas in Belgium). So, the gas price per kilowatt-hour (without fixed components such as network cuts) is computed according to the TTF103 + X formula, or
– TTF103 is the value of the index that varies each quarter (expressed in c€/kWh);
– X represents the supplier’s margin (expressed in c€/kWh).

This type of contract tends to to be closer to the most premature of the market. Selecting this option This could result in reduced rates when electricity or gas prices are significantly lowered on wholesale markets, but you may also have the impact of a price increase.

>> Read also: Why variable prices change every month

Advantages and inconsistencies of fixed and variable prices

You will have understood both of them own advantages and unconveyors.

Fixed price:

  • Benefits : Prices are stable, so you don’t risk unpleasant surprises when receiving your down payment bill. You stay safe from unexpected pricing on the energy market.
  • Inconveyors: In exchange for this security, the supplier is taking on a slightly larger margin on a fixed price contract.

Variable price:

  • Benefits : You can get integrated discounts if the market price decreases during your contract. In addition, tariffs for this type of contract on the subscription date are usually lower than those for fixed-price contracts.
  • Inconveyors : The risks are higher, and you will not have protection in the event of price increases.

Please note that variable prices as fixed prices only affect the energy portion in the total price you have to pay. This represents about one fifth of your invoice. Its exact share varies according to your area and the type of energy. To see what other components make up your invoice, you can visit the CREG site.

Can we really compare fixed and variable prices?

In the meantime, it is rather complicated to compare fixed prices and variable prices because of their nature. Indeed, for an effective comparison, you should take into account the price change that occurs monthly or quarterly for the variable rate. However, it is impossible to predict it accurately. One solution would be to use the prices of the last 12 months to try to find a trend. However, this exercise will not allow you to obtain a prediction or complete comparison between the two types of tariffs.

>> Discover: the best offers of the month for electricity and gas

Fixed or variable: What electricity or gas rates is best chosen in the end?

From then, how to choose between these two pricing methods if you cannot accurately which will be most profitable in the future? To do this, you will have to rely on other factors:

  • The level of your aversion to risk
  • Economic and common sense listens

Are you a specialist in aerobics ?

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You like charging energy prices and you think current rates, Was it high, could decline a little more in the coming months? Then a energy contract at variable price matches you.

If instead, you do not want to risk an unexpected price increasof electricity or gas, it would be more appropriate for you toopt for a fixed price contract. This stabilization will allow you to plan your savings more smoothly, without the risk of a bad surprise when you receive your payment bill.

How to identify the most appropriate rate based on the economic situation global?

Sometimes this is not a question of your call for risk or not. Sometimes it is enough to rely on the economic economy. Meme if you are not a specialist, there are quite exceptional situations that tell you opportunities to grab.

For example, during the Coronavirus crisis, Electricity and gas prices have reached historically low levels. In such cases, it would be partial to block these prices with a three-year fixed contract. Because even if at the time you compare contract prices, variable contracts seem more integrated than fixes, Remember that the situation can change quickly in the coming months.

Moreover, with the post-coronavirus economic recovery and the conflict between Ukraine and Russia we are experiencing a real economic and economic crisis that has caused the prices of energy to rise historically speaking. In that time, many are suppliers have suspended marketing of their contract at fixed price. Indeed, it was currently more risky to buy at a fixed price than at a variableprice, so the amounts have exploded. If you need to change your energy contract now, we advise you to purchase a variable price offer, in the case where tariffs would fall in the next few months.

How do I find the right contract?

Once you have decided on the type of contract to take, you will need to check which provider offers you the most integrated contract.

A price comparator such as Compare-Energy. e can help you, because you can specify in your comparison that you want a contract at fixed prices or at variable prices. It will then show you the best results of the moment.

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Concluding

Fixed prices or variable prices? Ultimately, there is no good or bad choice. It’s up to you: want stability, leaves to pay a little more, or do you think the volatility will be in your favour?

If you still cannot make your choice, please contact one of the Comparator-Energy consultants. We will then be able to take stock of your consumption profile and define with you the characteristics of your ideal energy contract.

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>> Read also: How is the electricity rate fixed?

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