Given the current state of the economy, one of the biggest concerns for people worldwide is the cost of necessities like gas and electricity.
Ultimately, there is only so much that one individual can do to reduce their electricity use, even while it is possible to keep your cost as low as possible. To make sure you don’t pay too much for your electricity, there are a few things you can do.
Two strategies that are widely utilized globally are fixed-term contracts and exchange-traded power. One will be more practical for you than the other, depending on where you reside.
The impact of the different electricity contracts
Consider Finland. They have experienced an unprecedented and totally unanticipated decrease in their electricity costs. Many people are trying to make the most of the situation by reconsidering their energy contracts as a result.
Electricity prices on the market have recently decreased by up to 60 cents per kWh. At rates of 8 to 9 cents per kilowatt-hour, fixed-term contracts are currently offered.
What does this actually mean? A detached home that is heated by electricity uses roughly 18,000 kilowatt-hours of energy annually on average.
Your power bill will be around 1,566 per year if you select a fixed-price contract at 8.7 cents per kilowatt-hour, which is currently the Energy Authority’s cheapest two-year offer.
The total would have been 1,101, 465 less than the fixed-price option, if the identical home had used exchange-traded electricity and the average costs from the previous year.
The difference is smaller if you live in an apartment. For example, the same 8.7-cent fixed contract would cost 174 for a person who lives in a district-heated building and uses roughly 2,000 kWh of electricity year.
However, the bill would have only been 52 if power had been exchanged on an exchange during the previous year.
However, it is simple to try to view all of your options and make as many switches as necessary to save money when every penny matters. However, there is an alternative perspective.
Since the energy provider assumes the risk of fluctuations in the market price, Antti Paananen, director of the Energy Authority, believes that fixed-price contracts are more about stability than cost savings.
You must be mindful of how much power you consume during peak and off-peak hours when using exchange-traded electricity because the costs fluctuate hourly. This is the primary cause of fixed-price agreements’ typically higher costs.
The optimum contract for your family will depend on a number of factors, including your salary. The most crucial consideration should be your salary, particularly if there isn’t much of a difference between the contracts.
Individuals who are struggling financially and cannot afford surprises ought to opt for a fixed-price agreement. They will always be aware of their payment amount in this manner.
If you don’t use electricity during peak hours, such as weekday mornings and evenings, exchange-traded electricity can save you money. This is only valid if you have additional cash on hand and can choose when to use your electricity or indulge a little more.
Nevertheless, factors that you cannot control, like the weather and the season in which you make these choices, will always have an impact on prices. Naturally, forecasting the weather is difficult, according to Paananen. Whether it’s calm or frigid, winter circumstances will have a significant impact on how prices move.
See Also: Bid Farewell to Inflation This is the official new adjustment to your US tax liability beginning in January.
Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.