Power and Gas offers: is fixed or variable price better?
Is it better to choose a fixed or variable tariff to manage your everyday Energy? With the end of the protected market, more and more consumers are asking themselves this question to find the Power and Gas offers that best meet their daily Energy needs. The transition to the free market offers new opportunities, it is true, but also requires greater awareness in choice to avoid surprises in the bill.
Each option has advantages and disadvantages that depend on various factors, such as the trend of the Energy market, the confidence in finding more advantageous opportunities with price fluctuations and personal consumption habits. There is no single solution, but a guide to the main aspects of the two categories can help you choose in an informed and aware way. Let’s discover how together.
Where to start?
Where to start?
Fixed and variable tariffs differ in the way the price of the Energy component and the price of the gas raw material are calculated. First of all, therefore, it is important to understand how the expense for the Energy raw material and the expense for the gas raw material are composed:
Expense for the Energy raw material: includes the purchase of Energy and dispatching, that is the service that guarantees the balance between demand and supply of electricity at all times. It also includes the Commercialization and Sales Fee (Power CCV), which covers the commercialization costs incurred by the supplier.
Expense for the gas raw material: includes the purchase of natural gas and the coverage of commercial risks. It also includes the Commercialization and Sales Fee (Gas CCV), which serves to cover the commercialization costs incurred by the supplier.
How to distinguish fixed and variable tariffs
The expense for the raw material (Energy and Gas) is valid for both types of tariffs, but how does it vary between fixed and variable tariff? Let’s go into detail:
Fixed tariff: the prices of the Energy component and of the gas raw material component are established when the contract is signed and remain unchanged for its entire duration: Enel offers price locked for two years. The price of gas transport, meter management and system charges depends on the tariff updates of ARERA (Regulatory Authority for Energy, Networks and Environment).
Variable (or indexed) tariff: the prices of the Energy component and of the gas raw material component vary according to the trend of the Energy market, which is updated periodically based on wholesale prices. In this case too, the price of gas transport, meter management and system charges depends on the tariff updates of the Authority.
At the base there is the same principle that regulates the difference between a fixed-rate and variable-rate mortgage for the purchase of a house. With a fixed-rate mortgage, you pay the same instalment every month, with the interest rate present on the market and locked when the contract is signed. With a variable-rate mortgage, instead, the instalment changes according to the trend of interest rates on the market: you could pay more in one month, but save in the following one.
Fixed and variable tariff: pros and cons
Choosing a fixed tariff guarantees cost stability over time and greater security against price increases. The price of electricity and gas remains the same for the entire duration of the contract, indefinitely, and protects you from any price increases on the market, allowing you to plan household expenses in advance. However, if Energy prices fall, those who have chosen a fixed tariff cannot benefit from any reductions.
The variable tariff, instead, is based on the trend of the PUN Index GME, the wholesale electricity price published by the GME (Energy Markets Operator) on the electricity market and calculated on the average of the zonal prices of each region. Its cost is updated monthly, offering greater dynamism in prices.
When the market records a decrease in prices, the variable tariff allows you to pay less than a fixed tariff, generating savings on the bill with the same consumption. But be careful: if Energy prices increase, the cost of the supply also increases, making the bill less predictable and potentially higher in periods of growth.
Tips for an informed choice
Do you prefer the certainty of a locked cost or the possibility of saving by following market trends? Follow these tips to navigate the tariffs available on the market and choose the Power and Gas offers that best meet your needs.
Monitor the trend of the Energy market
Energy prices are not static, but vary according to several factors, such as demand and supply, raw material costs and the economic context. If the market is generally stable or growing, a fixed tariff can guarantee protection from any price increases. On the contrary, if prices show a downward trend, a variable tariff could allow you to save over time.
Assess your consumption habits
Consumption habits directly affect the convenience of a tariff, based on three main factors:
Frequency
If your consumption is stable over time, a fixed tariff is the safest choice to plan Energy expenses in advance and avoid sudden price fluctuations. If you choose a stable and guaranteed price tariff, you can differentiate it based on your consumption habits:
Single-rate tariff: it provides for a single price of the Energy component for all hours of the day.
Three-rate tariff: it provides for a different price of the Energy component during the day based on the consumption time slots.
Variable tariff: if your consumption changes frequently, it can be an opportunity to find increasingly advantageous offers based on the trend of your habits.
Energy expenses
Users who consume more Energy, such as families, are more exposed to the risks of price increases, so a fixed tariff can help manage the family budget with greater peace of mind. For consumers who spend a lot of time away from home or have limited Power and Gas expenses, the variable tariff can present interesting opportunities.
Risk appetite
No less important, the approach to managing expenses also plays a role in choosing the most suitable tariff. If you prefer to have certainty and plan your budget precisely, a fixed tariff will guarantee you stability and peace of mind. If instead you prefer more dynamic management and want to seize the opportunities offered by the market, a variable tariff can represent a more flexible choice.
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