Increasing rates on fixed-price energy contracts in Denmark are making variable rate contracts a more attractive option for many consumers.

While many people have adapted their energy habits to minimise bills – for example, by using appliances at night – that option is not available to people on fixed-price electricity contracts – fastprisaftaler in Danish.

Fixed price contracts set the energy price at a specified amount. This price then applies around the clock and remains set for a period of three months.

The fixed price has increased considerably as energy costs to consumers and businesses alike have risen in Denmark and the rest of Europe over the last year.

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Nordlys and Andel Energi, two of Denmark’s largest energy suppliers, will charge double the rate for electricity for the last quarter of this year compared to Q4 in 2021, broadcaster DR reports.

The two companies have a combined customer total of around 1.8 million.

Customers with Norlys will pay around 4.98 kroner per kilowatt hour of electricity on the company’s ‘PuljeEl’ plan in October, November and December, DR writes.

A similar fixed plan with Andel Energi sets the price at 4.84 kroner per kilowatt hour on the company’s ‘BasisEnergi’ deal.

That is a higher price than customers are currently paying on variable (variabel) plans.

As of Monday, the variable rate is 3.30 kroner per kilowatt hour. The highest rate so far this year occurred in late August, when it reached 10 kroner per kilowatt hour.

“Customers who have PuljeEl had their price fixed in July, August and September. In those three months, we saw that the price of electricity increased continuously. But because customers had a fixed price they did not experience the ongoing price increases, but are now getting them in a single raise,” Norlys head of press communications Michelle Hald told DR.

When the company purchased or ‘reserved’ electricity for supply for the last quarter of 2022, the price was higher than it is now. That is reflected in the rate of the fixed plan.

“The new price is therefore the price at which we could buy electricity on the market in September, when we purchased for the fourth quarter,” Hald said.

Customers are currently likely to save money with variable contracts, according to consumer rights group Forbrugerrådet Tænk.

“Electricity prices swing enormously so I think you can get more out of adapting your consumption to when prices are cheaper,” the organisation’s senior economist Morten Bruun Pedersen told DR.

Variable electricity prices can be very low if, for examples, conditions such as windy weather increases turbine production and reduces the use of other fuels in electricity supply.

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The drawback of variable rates is that they make it more difficult to plan an exact budget, Pedersen said.

“If you really need security and are willing to pay for it, then a fixed-rate deal can be a solution, I just think it might be an expensive solution,” he said.

Norlys told DR that customers who want to switch electricity plans can do so effective from the first day of the following month.

Customers should contact their own suppliers to find out what conditions apply to them.

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