In Norway, there are few people who have a fixed price for electricity. In our neighboring countries to the east and further south in Europe, the proportion of fixed-price customers is much higher. High prices and an unclear market can still mean that more people see the benefits of a more predictable power agreement. And it is in the summer months, when prices are often low, that it can be worthwhile to consider which electricity contract you want. This is the difference between spot price and fixed price Spot price With spot price, the electricity bill will vary from month to month depending on what the market price is. The electricity price in Norway is seen on the power exchange Nord Pool. Fixed price With a fixed price, the price per kWh is fixed for a period. This period can be a few months or up to several years. The supplier is obliged to deliver power at this price throughout the contract period, and you as a customer are bound by the contract until the contract period expires. Spending money on high spot prices – I have a neighbor who is a minimum pensioner. He got an electricity bill of 4,000, while I got paid for using electricity, says fixed price customer Mathias Nilsson. Nilsson says that the fixed price agreement, combined with the support scheme for the government, means that he can make money when the spot price is high. The higher consumption when the spot price is high, the more money Nilsson receives in the form of support from the government. The last time the spot price was high, he invited the neighbors to visit to charge their cars. – There was almost a bit of a queue actually. Failed support scheme In December 2021, the government introduced the electricity support scheme which will help households in the face of extraordinary electricity prices. Through the scheme, the government covers 90 per cent of the power price above 70 øre per kilowatt hour for the consumer. The scheme does not take into account what power agreement the individual has. Chief analyst Tor Reier Lilleholt in Insight by Volue explains the loophole that Nilsson has benefited from as follows: – Anything over 70 øre gets a state subsidy. You can risk that if the price is over NOK 2 for a single hour, you can get NOK 1.20 in state aid. It is perhaps higher than what one pays for the electricity, including all fees. Head of analysis at Insight by Volue, Tor Reie Lilleholt. Photo: Leif Dalen / news He still thinks that this is something that only applies for a dozen hours. – I’ve had a look at the statistics so far this year. You can almost count on one hand, or tens of hours, where this would have been a business that would have been attractive, he insists. Ministry of Energy: – Unfortunate State Secretary Elisabeth Sæther in the Ministry of Energy tells news that it is unfortunate that for some customers there may be hours where they lose money on using electricity. State Secretary in the Ministry of Energy Elisabeth Sæther. Photo: Sunniva Linjord / news However, she believes that an alternative scheme, where the electricity contract for individual customers is taken into account, will also have challenges: – If the scheme were to weed out all customers with fixed price contracts, this would also affect customers with fixed price contracts who do not pay to increase consumption, he says. Sæther says that customers who have entered into a fixed price agreement for a longer period may also experience having to pay more for the electricity in periods where the spot price is lower than the agreed fixed price to the customer. Spot price most profitable But it is still the spot price that is most profitable for most people, according to the analyst. – If one were to enter into a fixed price agreement today, those who deliver a fixed price agreement would also be very few, and they would take a rather large risk premium at the top, says Lilleholt. He says that prices have now stabilized, but that the price level is still higher than it was before the invasion of Ukraine. Going forward, extremely high prices are not expected. – If you want to have more control over how much it will cost from month to month, then a fixed price would be an advantage. But generally speaking, I would say that most consumers in Norway have an advantage in not having a fixed price. Has lost money so far Fixed price customer Jon Erik Nordskog has not been able to benefit from his agreement so far. He entered into a fixed-price agreement in April this year. – The fixed price agreement has not been anything lucrative now, because the spot price has been low in recent weeks and months. So now it is a loss-making project. He says that in advance he expected that the agreement would be a loss-making project in the summer months, but that he thinks he can make a profit in the winter. Jon Erik Nordskog hopes the power agreement will pay off in the winter months. Photo: private – So buying a fixed price agreement for me is a speculation. Nordskog is also aware of the hole in the current support scheme. – If you have a smart house, and have the right system, you can make use of it. You shift consumption to the hours when the electricity price is abnormally high, and then you reduce consumption when the electricity price is low. – It is negative for the entire electricity market, he concludes. Published 26.06.2024, at 05.33
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