Electricity contract for an indefinite period is, as its name suggests, valid for an indefinite period - without a fixed term. Unlike fixed-term electricity contract, an electricity contract of indefinite duration can be terminated with 14 days' notice under the Consumer Protection Act. The term of an open-ended electricity contract no special reason is required for termination and no penalty is payable for termination. You can therefore exchange this contract for another electricity contract or another electricity company's contract at any time. Because of their flexibility, open-ended contracts are very popular among Finns.
Different types of contract
Contracts valid until now are available from different electricity companies for a wide range of purposes. Because of the wide differences, it is worth comparing and competing between all the companies at the same time to ensure that you can easily get the most suitable electricity contract for your needs. However, let us briefly review the different types of open-ended electricity contracts.
Market priced electricity
One of the most common electricity contracts in force for the time being is the so-called "exchange contract", where the price of electricity is determined by the spot price at the time. The spot price of exchange electricity is increased by the electricity company's commission (per kWh) and a basic charge (€/month). Exchange electricity is often the cheapest option for consumers - especially if they can optimise their electricity use between different times of the day. Exchange electricity is cheapest at night. The disadvantage of exchange electricity is its unpredictability - the price is determined by the spot price, and any high price increases are paid by the consumer.
Fixed monthly price contracts
Fixed monthly price, open-ended electricity contracts are very simple: you pay the same price for your electricity every month, regardless of how much electricity you use. Fixed monthly price electricity contracts are suitable for people who want accurate predictability and stability in their electricity bills. With a fixed price electricity contract, the price varies according to the type of dwelling, and this type of contract is therefore mostly only available for apartment blocks and terraced houses.
The downside of this type of contract is that it is relatively expensive for people who use little electricity. Since the price is the same for people in a certain usage range, a fixed price contract is cheap for a high electricity user but expensive for a low electricity user. A fixed-price contract may therefore seem easy and its costs are easily predictable, but this type of contract may be more expensive than other contracts.
For example Fortum Standard Contracts are fixed monthly price contracts. Fortum's Standard has five different contract sizes, depending on the amount of electricity used. This evens out the difference between households with low and high electricity use, making a fixed monthly price contract a reasonably good choice even for a smaller household with low electricity use.
Contracts with variable price from time to time
A large proportion of electricity contracts fall somewhere between exchange-traded electricity and fixed-price contracts. In these contracts, electricity is charged according to consumption, but the price of electricity is decided in advance for a longer period than in the case of exchange-traded electricity. In the case of exchange electricity, the price is determined by the spot price at any given moment, which makes pricing unpredictable. In intermittent price contracts, the price is always reviewed at intervals - often every six months. After the review, the electricity price always remains the same for the period.
The advantage of this type of contract is that it is billed according to usage, which is a fair choice even for households that use little electricity. Another advantage is the stability of pricing - the price paid for electricity does not fluctuate over a short range, as it does for electricity on the stock exchange.
These contracts also usually include a night-time electricity feature, so that owners of detached houses can also benefit from cheaper night-time electricity under this contract model.
Because of their flexibility, affordability and transparent pricing, variable-price contracts are the most popular electricity contracts. One of the most popular and flexible options is Fortum Stable.
Summary - is an open-ended electricity contract a good choice?
An open-ended electricity contract is a very popular choice, due to its flexibility and easy termination. In general, these types of contracts are also inexpensive; a fixed-term contract is very rarely cheaper overall than an open-ended contract. Fixed-term contracts are actively marketed by electricity companies, for example in shopping centres and by telephone retailers. However, before purchasing such a contract, it is always worth comparing the different types of contract and the different electricity companies' contracts, so as not to make the mistake of choosing an expensive contract that you cannot get rid of.