Electricity is getting more expensive daily. The need for cleaner energy increases as the globe gets warmer and the environment changes. Norway is experiencing a lot of increases in energy consumption and bills, and each year, it is seeing a rise in the market price. One of the perks of using electricity in Norway is that it provides three types of contracts from which consumers can choose.
They can pay a specific amount per kWh using the fixed price contract. That means the price remains the same whether the market price goes up or down. The perk of using this contract is that users know how much their electricity bill is, regardless of the market price.
Over time, however, this set price can become a disadvantage because the market price can drop, and users can do nothing about changing their fixed price. If that does not fit their long-term budget, they can go for the spot price, which is the market price.
In simple terms, a spot price depends on the fluctuating market price, and people using that power agreement pay the same as the supplier and see a lot of rise and fall, although it is widely accepted as the best. The reason is that at specific periods, the price can drop due to a drop in demand. So the users can save money.
The disadvantage is that when the prices rise, as they are doing today, users will also have to pay more to the supplier, even if other contracts pay less to their suppliers. However, if the first two do not work, there is a third option: the variable price plan. The price users pay in a variable electricity contract depends on the market rate and other factors, hence the name.
That means the cost does not depend on a single factor and can be good or bad, depending on the other determining factors. This contract type is not common but can be helpful in certain situations. The spot price plan is the most beneficial over time because, while the price can vary, it can also drop low, putting you at an advantage.
However, before entering into that contract or any other type for your electricity supply and billing, you must decide whether you want a short-term or long-term one. You must also determine how to switch to a new supplier if you are already in an agreement with another but want a new one, as bestestrøm.no/ explains. Let’s discuss these factors and consider a few more things to ensure a smooth process.
Contents
Short and Long-term Contracts: Which Works Best?
A few things to consider when looking for the best electricity contract are the accompanying fees and contract length. You must determine if there are hidden charges that surface once you enter the contract. Also, you must decide if you want to stay with the contract for a few weeks, months, or years.
Short-term Contracts
A short-term electricity contract usually lasts less than one year. That means it expires before 12 calendar months, and you have a renewal or termination option, depending on the relationship and how much you liked the service. It can be monthly or run for three months. It can also run for six months or a little longer.
This contract may allow you to choose the plan that fits your budget, but a monthly agreement may stipulate a variable price plan, which means the electricity supply price changes each month. A short-term plan can be advantageous because it allows you to try several suppliers and use different plans until you find a good fit with a reliable supplier.
The possible downside is that the contract may run out at a time of year when the demand is high, which may increase the price and make finding a supplier with reasonable rates a little challenging. You may also have difficulty keeping track of your renewal dates if you must renew every month. Additionally, predicting the new rates can be challenging, which affects your budgeting.
Long-term Contracts
This type is more common because it does not demand remembering dates and rates. A long-term contract typically extends up to 12 calendar months; it can last up to 18 or 36 months, but some extend to five years. Although it may seem like putting a gag on your freedom to explore the market and take advantage of low rates, a long-term contract gives stability and can save money.
The reason is that the price tends to stay the same for long periods, making it easier to predict and budget accordingly. In other words, you do not look for new suppliers and check market rates. Such a contract also helps you save since you can already predict how much to pay for the electricity each month.
In addition, you are sure of regular and steady supply, regardless of what is happening in the market. However, such a contract means you cannot take advantage of various price changes, regardless of how low the price drops. That may mean remaining on a high price for extended periods while other users enjoy a lower rate.
Another downside is switching electricity suppliers may be tricky while still in a contract. For example, changing suppliers halfway may be difficult if you have a five-year agreement. You may have to wait until the end or close to the end of the agreement before finding a new provider. Click here to learn more about short-term and long-term electricity contracts.
The determining factor for most people is the supply and price stability. Choosing between a short-term and a long-term contract may seem daunting, but consider the predictability of long-term agreements. You know how much to pay monthly and can budget for the future. You do not have to worry about sudden rate increments, a bane of short-term contracts.
The latter requires you to work extra hard to keep abreast of market prices and trends while looking for the best low prices. Nevertheless, your choice depends on your home’s needs and peculiar situation. A short-term contract may be temporarily more beneficial than a long-term one, so pick the one that best suits your home’s needs.
How to Switch to a New Supplier
Switching to a new electricity supplier is easy. The hard work is in getting a reliable one with the best peco electricity rates. If you believe your current contract is not favorable and want to switch, the first step is to shop for a new supplier for a more favorable contract. Once you find one, they typically send the swap schedule, the timeline for swapping suppliers within a specific period, and the form to fill out.
They can send it by mail or online, and when you receive and fill it out, you must wait a few weeks for a decision; sometimes, it takes three weeks to a month for the swap to become effective and active. As mentioned, switching can be easy since you only have to request and fill out a form, and the supplier does the rest.
Other Considerations
Your past electricity contracts can guide you to finding an ideal new one. Consider various aspects of the contracts to see what worked well and where improvements were necessary. What parts did you benefit from, and has any of it changed as it concerns your current situation?
You must also consider your home’s electricity consumption. Has it changed over the past few months or years? What time of the day do you use the most energy? Some providers offer perks like a free weekend plan. If your consumption is higher on weekends than during weekdays, such a supplier and contract might be your best shot.
Your location is also crucial to finding the best contract. Some areas pay much higher than others due to demand. Research and learn about the highest demand periods during the day and when demand drops. You can take advantage of these changes and use them to determine which provider or contract is ideal. Check for additional electricity billing fees and ensure the contract terms are favorable before committing to any supplier.
Conclusion
With the price of electricity on a steady rise in recent years and months, it is not strange for people to desire a switch to more favorable contracts to cut costs. However, it can be more challenging than it seems. But you can decide which plan works best – spot, fixed, or variable – and decide how their energy consumption can be adjusted to lower the bills.
In addition, the long- or short-term contract type is crucial because each contract has perks and downsides. Understand the energy sector and how it affects your supply. Then, you can easily decide what works best for your household.