Differences between contract types
The contract types differ from each other in terms of validity and pricing.
Valid until further notice: the electricity sales contract between the electricity provider and the customer remains in force until it is terminated. The price of electrical energy (given as cents per kWh) and the basic charge are known in advance. The network operator is obligated to notify the customer of any changes one month prior to their entry into force.
The customer has the right to terminate the contract with a period of notice of two weeks, while the period of notice for the electricity provider is one month.
Fixed-term contract (for one or two years, for example): the electricity sales contract remains valid for a predetermined time and will be automatically terminated at the end of this period. The price remains fixed throughout the fixed-term period.
In most cases, termination of a fixed-term electricity contract or switching electricity providers before the end of the contract period is not possible. Termination of a fixed-term contract is a contractual action. Hence, you should check from the contractual terms whether moving is considered sufficient grounds for termination, for example. A fixed-term contract with an contract period of more than two years is an exception to this rule: a consumer can terminate such an contract when two years of the fixed term have elapsed.
Market-based: a contract where the price of electricity is generated in compliance with a formula determined in the contract. In most cases, the pricing is tied to the hourly changing market price (spot price) of the Nordic power exchange Nord Pool.
The customer pays the stock market price, to which the seller may add a commission and a basic charge. The seller need not notify the customer of any price changes if the price is tied to publicly available benchmarks. However, if the electricity price is given as “our procurement price + margin”, for example, calculating the electricity price is impossible and the seller must notify the customer of any price changes in advance.
The customer has the right to terminate a marked-based electricity contract valid until further notice with a period of notice of two weeks, while the period of notice for the electricity provider is one month.