New hybrid electricity contracts launched in Finland amid consumer warnings

The marketing for a new type of electricity contract in Finland is enticing: it promises to be cheaper than fixed-rate contracts and less risky than market-based pricing. This hybrid contract combines elements of fixed-rate electricity and market pricing and is now offered by nearly every electricity company under various product names, but it’s so new that there aren’t even statistics available yet.

There are three types of electricity contracts available:

1. **Fixed-rate contract**: You pay the same price per kilowatt-hour (kWh) throughout the contract period.
2. **Market-based contract**: You pay a fluctuating price based on hourly market rates.
3. **Hybrid contract**: You pay a set kWh price but can adjust the total cost by shifting your consumption to cheaper times.

Consumers may save money by using electricity during off-peak hours when prices are generally lower, such as nights and weekends. However, experts warn about three risks buyers should be aware of.

Firstly, comparing hybrid contracts can be very challenging. Jeeb Beurling-Pomoell, Secretary General of the Consumer Union, states that these contracts often appear cheaper than fixed-rate options on official sites. Concerns arise that consumers may inadvertently choose a contract they do not fully understand.

Secondly, potential savings are hard to predict, especially since high winter demand can spike prices. Even a single surge in pricing during a month can negate previous savings.

Lastly, many hybrid contracts are fixed-term, lasting one or two years, making it difficult to exit if they turn out to be unsuitable.

Electric companies highlight that understanding and monitoring one’s electricity consumption is crucial to benefiting from these new contracts.