Are monthly electricity price fixes worthwhile? Their main advantage is gone

Electricity suppliers are competing to update their new price offers. In the past two weeks alone, innogy and E.ON have announced price cuts for non-fixed tariffs. Earlier, partly state-owned ČEZ announced price reductions from the new year. Electricity prices for households on non-fixed products have thus virtually caught up with those under the previously popular monthly fixed-price contracts. 

After the sharp rise in household electricity prices as a result of the energy crisis, electricity prices are beginning to stabilise again. The three main players in the Czech electricity market have cut electricity prices for open-ended, non-fixed products.

ČEZ was the first to reduce its electricity price for households without a fixed term, lowering it from the start of next year to 3 388 Kč/MWh excluding VAT in the most common D02d tariff. It was followed by E.ON, which will offer electricity in the same tariff from the new year at an even slightly lower price – 3250 Kč/MWh excluding VAT. innogy also cut its prices from 1 December, supplying households on its non-fixed product at 3924 Kč/MWh excluding VAT.

The electricity price change will automatically affect customers with open-ended contracts. ČEZ alone has 1 700 000 such customers, while E.ON has 700 000. Another 700 000 customers have been receiving cheaper electricity from PRE since September.

Households are therefore currently benefiting from consistently lower electricity prices on wholesale markets. This year, they have again remained below 100 EUR/MWh.

Smaller suppliers go even lower on prices

However, some smaller suppliers offer even lower prices than the major suppliers. The cheapest offer in our Electricity Price Comparison Tool is currently from Eneka. It offers non-fixed electricity in the D02d tariff for 2892 Kč excluding VAT, but only for consumption of up to 3 MWh per year.

Only one other offer can be found below 3000 Kč/MWh excluding VAT: 2999 Kč/MWh from Veolia Komodity ČR. Electricity can be supplied at this price from January next year.

Monthly contract prices have gradually risen and are catching up with non-fixed products

As electricity prices fall for non-fixed contracts, monthly fixed-price contracts are losing their appeal. Contracts of this type began appearing as the energy crisis receded, in response to the inability to bill households based on spot electricity prices unless they are equipped with smart meters with interval metering.

Under monthly contracts, as the name suggests, the price changes each month according to the current wholesale exchange price. The supplier generally adds a trading margin to the exchange price, amounting to around 400 Kč/MWh excluding VAT.

Prices of products with a monthly price track current wholesale market trends much more quickly. If exchange prices fall rapidly, customers on monthly pricing will be the first to feel it. The same, however, applies when exchange prices rise.

This is also the case now. As the chart of monthly prices from Centropol shows, electricity prices have been rising steadily since May this year and are now around 3100 Kč/MWh excluding VAT, while the November price is already approaching 3200 Kč/MWh.

Prices under monthly fixed-price and non-fixed contracts are thus virtually converging. Traders have not yet announced December and January prices, and only then will a more accurate price comparison be possible.

Further developments in household prices will be influenced by wholesale electricity prices on the exchange, which depend on energy commodity prices and also emissions allowances. Emissions allowances in particular could have a significant impact on electricity prices and push them higher still. They are currently trading at around 65 EUR/t. However, many analysts expect them to reach as much as 100 EUR/t.