At €67 per megawatt-hour, the TTF gas price index closed on Friday—on the Netherlands’ benchmark market—at a level that remains double what it was at the start of the year.
But it is primarily the level of gas stocks that is causing concern.
At the end of August, European reserves were only about 63% full. At the same time of year, they usually reach nearly 80%. Europe is therefore entering the heating season significantly behind schedule.
Yet, gas purchases must continue. And starting in the autumn, consumption will rise as heating systems are turned on.
Fuelling market fears
This is what is fuelling market fears: if Europe has to ramp up purchases to fill its reserves while global gas supplies remain tight, prices could rise further. Analysts at ING already estimate that even the 75% fill target might be difficult to reach before winter.
However, it is on these wholesale markets that variable rates for consumers like us are calculated. These market prices also determine how energy suppliers assess their costs and risks, and set the per-kWh rates they charge customers under fixed-rate contracts. The precise terms of these contracts are reviewed at the start of each month—including this Tuesday, September 1st.
With prices soaring, it may be worth asking the question and comparing options—but using the right data, which isn’t always available on comparison sites. Here is what to look out for.
Variable rates aren’t always cheaper
It is a common refrain: “fixed rates are always more expensive.” But that is not true.
There is a problem with variable-rate contracts: when you compare them today, you don’t really see what you will be paying tomorrow.
Let’s look at a price comparison tool. You enter your consumption, region, and contract type. The comparison tool provides an estimated annual cost. And almost invariably, the variable-rate option appears cheaper than the fixed-rate one.