There has been a lot of discussion about electricity prices over the past year. Summer prices were moderate but there was a spike in the spot price of electricity in August, which made many consumers cautious once again. As autumn and winter are approaching, many are currently contemplating how to ensure reasonable electricity bills for their homes during the cold season. Let’s ask what tips Kristel Pynnönen Andersson, a lawyer specializing in housing matters at the Consumers’ Union of Finland, has for us!

What can consumers do in their daily lives to keep their electricity bill under control?

First and foremost, it’s essential to know what kind of electricity contract you currently have and consider whether it suits your needs. Are there better options available on the electricity market? It’s a good idea to familiarize yourself with different types of contracts and compare them to your own electricity usage patterns. There are fixed-term contracts, fixed-price contracts, open-ended contracts, and spot electricity contracts available in the market. It’s essential to understand the “contract jargon” so that you know what you’re committing to.

For whom is a spot electricity contract suitable?

A spot electricity contract, which fluctuates based on the electricity market price, is suitable for electricity consumers who are willing to actively monitor their electricity consumption and adjust their routines according to price fluctuations. This means, for example, scheduling electricity usage during periods of low prices. Various technical solutions are available to assist with this, especially in modern smart homes. Of course, you should also consider whether you want to deal with the changes in electricity prices and smart devices.

So, should one avoid activities like doing laundry during electricity price spikes?

The cost difference may not be significant during a brief price spike but if you can shift your consumption, it’s a good idea to do so. Prices have risen across the board, and even small savings can add up.

Is it necessary to switch to a fixed-term contract to avoid price spikes during the upcoming winter?

Not necessarily. For some of the coldest months, the price in a fixed-term contract may be lower than in an open-ended contract. However, fixed-term electricity contracts are typically for a period of two years. Over a more extended period, price fluctuations often even out. On the other hand, a fixed-term, fixed-price contract can provide peace of mind, as you’ll always know the current price. For some, this is an important factor, even if the electricity costs a bit more.

Committing to a fixed-term contract should always be considered carefully. Consumers entered into unfavorable fixed-term electricity contracts last winter, which turned out to be expensive.

Generally, it’s not possible to terminate a fixed-term contract before its expiration.

What are the advantages of an open-ended contract?

If you choose an open-ended electricity contract, you can take advantage of competitive prices by monitoring different companies’ rates and actively renegotiating your contract. However, this requires a willingness to switch electricity providers based on offers and active price monitoring. It’s a good idea to assess your electricity usage over a longer period to find the contract type that suits you best.

The government decided at the beginning of the year on various supports aimed at helping consumers struggling with high electricity bills. Which of these supports are still relevant?

If your electricity consumption between January 1st and April 30th exceeds €2000, you can apply for a tax credit for electricity as part of your personal taxation. You can apply for the credit by requesting a revised tax card and referring to the electricity expenses or by checking the pre-completed amounts in spring 2024 and make corrections if needed. You can find more information on the tax authority’s website.

If you have experienced high electricity costs during the early part of the year (January 1st to April 30th) but cannot apply for the tac credit, you can apply for temporary assistance with electricity costs from Kela. You can apply for this support until the end of this year, and I suspect that not all those eligible for this support have applied yet. You can find more information on Kela’s website.

There is also a retroactive reimbursement for electricity costs, which electricity companies should consider. First, check if you are entitled to a reimbursement for your electricity bills from January to April and then make sure that the reimbursement on your invoices have been calculated correctly. The reimbursement should be visible on the invoices for April or May, or if the billing interval has been long, in summer invoices. If there are any discrepancies on the invoice, it’s a good idea to inquire with your electricity provider.

Instructions and information about various electricity-related supports can also be found on the websites of the tax authority, Kela, as well as on the websites of electricity companies, Motiva, the Energy Authority, and the Finnish Energy.

How should our society prepare to ensure that consumers do not face an electricity price crisis similar to last winter?

I hope that policymakers will consider necessary and effective mechanisms well in advance should electricity consumer prices rise in the same way as they did last winter. Support was distributed to consumers this time as well, but it turned into a real maze of support options.

Frankly, the terms and conditions are quite difficult to understand

Published on September 6th
Photo: Maarit Lahikainen