Long-term electricity contracts sometimes include a contract termination fee. Let’s shed light on the topic – what is the most important thing to know for a customer?
Member of the Management Board of Eesti Energia Agnes Roos explained that the contract termination fee is not intended to punish customers. “The fee covers the loss incurred by the electricity seller if the customer cancels the contract early and if we have to sell the customer’s abandoned electricity back to the market at a lower price than when we bought it. The fee is not applied to every customer, but only when the damage actually occurs. Considering today’s market situation and the rise in electricity prices, we have no reason to apply the fee until the end of the year.”
Today, the contract termination fee is used only in long-term fixed-price Fix Plus contracts and only affects 1.5% of Eesti Energia’s customers.
“The fee component is beneficial for both us and the client. Thanks to this, the customer gets a cheaper price than usual with a long-term contract, and in return gives us a so-called promise that he will not cancel the selected package right away,” added Roos.
For the customer, the amount of the fee depends on two factors: the annual volume of electricity consumption and the contract cancelling time. Most domestic customers remain in the consumption volume segment, where the maximum penalty for withdrawing from the contract is either 240 euros (apartment owners) or 480 euros (owners of townhouses, houses). The later you cancel the contract during the contract period, the smaller the fee will be.
“We want the consumer to make an informed choice when signing a contract, that’s why we thoroughly inform customers about the contract termination fee and the possible maximum costs in case of contract termination,” confirmed Roos.
According to Roos, the question of whether and how the contract termination fee will be compensated to consumers is currently under discussion in connection with the reform of the electricity market. “We hope that clarity will come as soon as possible for all market participants. In the meantime, we ask customers for patience,” said Roos.
