Fixed or Variable Energy Tariff, What Kind of Contract Should you Choose ?
In Belgium, there are two main tariff options for energy contracts: fixed or variable price tariffs. What are the advantages and disadvantages of each one? Thanks to this energy guide, you will know the differences between these two types of pricing options and decide which tariff is best for you according to your consumption profile.
Fixed Price Tariffs and Variable Price Tariffs
When you sign a contract with an energy supplier, you have the choice between several types of tariffs; those with fixed unit prices and those with variable unit prices. What is the best deal and what are the differences between these two pricing mechanisms?
The estimate of your monthly payments is based on an average of your consumption over the previous years times your unit prices (price/kWh) plus the cost of transportation and distribution of energy.
What is a Fixed Price Tariff?
Fixed price (prix fixe) tariffs can protect you from fluctuations in the energy market in Belgium.
If you opt for a fixed price energy contract, the supplier agrees to block the price per kWh and the annual fee (redevance annuelle) for the duration of the contract. The length of the contract can be up to 5 years depending on the tariff and the supplier you choose.
For example, the Zen 5 year tariff from the energy supplier Mega offers you a fixed price for five years. With this offer, you avoid a possible rise in energy prices over a long period. However, the rates for the other components of your bill are not frozen. The prices that are set by external entities, such as the DSOs and the TSOs can change as they are not controlled by the energy supplier.
Also, do not confuse the fixed price offer with the monthly payment! The amount of the monthly payment can be modified according to the annual meter reading. Depending on your consumption which can change, you will pay an additional consumption or you will be reimbursed for the surplus that you have paid.
Since your energy consumption changes, it impacts your year end bill (facture de régularisation), which will increase or decrease. Only the supplier's energy unit price will remain fixed.
This is good, because if you know your consumption, more or less, you can plan out your finances. So even if you know your consumption will change, you know the price you will be paying based on the new consumption.
If you sign a contract with an energy supplier in Belgium, you are not commited for the duration of the contract. In fact, after one month's notice, you can terminate the contract or change supplier without paying a fee.
What is a Variable Price Tariff?
Variable price (prix variable) tariffs, also called “indexed prices” (offres indexées) follow the changes of prices on the Belgian energy market. This means that the price per kWh of electricity and natural gas are updated monthly or quarterly. So you will experience market fluctuation, whether it is an increase or decrease in energy prices.
The Pros and Cons of Fixed and Variable Rate Tariffs
Whether you choose a fixed price tariff or a variable price tariff, you will have pros and cons. In general, fixed price tariffs have a higher yearly subscription fee and / or price per kWh.
In the short term, variable price offers seem more economical. On the other hand, in the long term, favor fixed offers to protect yourself from the trend in energy prices which are generally on the rise.
|Type of Tariff||Pro||Con|
|Fixed price tariff||
|Variable price tariff||
Choose Your Tariff According to Your Consumption Profile
Based on your consumption, you can determine the offer that best suits your needs and habits.
Here are some criteria to help you determine your profile:
- Do you live alone or with other people?
- What is your rhythm of life and how much time is spent at home?
- How big is your residence?
- Is your heating on electricity or gas?
- How long is your lease?
Before choosing a supplier, it is important to know your energy consumption. For this, CallMePower provides you with an estimation tool (FR/NL) so that you can have an overview of what you consume in energy!
If you need any advisor to walk you through it in English, you can contact us on: 02 588 02 45
A customer wishing to save money upon signing his contract will opt for offers at variable prices. These variable price tariffs are suitable for low electricity consumption.
On the other hand, fixed price tariffs are favoured by high consumption customers aiming for price stability. These turn out to be more interesting especially if you live in a large household.
Compare Tariffs to Find the Best Prices
Now that you know the difference between fixed price tariffs and variable prices, it is time for you to make a choice!
Are you undecided? At CallMePower, we compare the offers on the Belgian energy market for you! As we work to build our comparisons in English, you can read our comparisons in French, or you can talk to an English speaking advisor at: 02 588 02 45.
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