Price locking adds flexibility to your spot-price electricity contract

Predictability for your electricity bills, tailored to your needs 

Even if a spot-priced contract suits your everyday life well, you may desire more predictability to your electricity costs during certain months. Price locking allows you to lock in the electricity price level for one month or quarter at a time. This way you can, for example, prepare for winter without having to choose a fixed-price contract for the entire year or switch to another open-ended contract. 

According to Jakob Frants, Sales Manager at Vaasan Sähkö, you should primarily consider the decision to lock prices from the perspective of your own household finances. If electricity bills account for a significant share of your household budget in winter, agreeing on a price level in advance can make it easier to plan your spending. 

How do you make a price lock, and what determines the lock rate? 

If you don’t make price locks, Spot Smart works like a regular spot-price electricity contract. You decide whether to lock in a price, when to do so, and at what rate. You can make price locks for periods of one month or quarter, meaning three months. The lock price applies for your chosen period. After that period, the contract continues as a regular open-ended spot-price electricity contract. 

The rates available for locking are based on electricity market futures prices and are updated continuously throughout the day. Futures prices reflect the market pricing of future electricity delivery periods, rather than a reliable prediction of what spot prices will actually be. 

The price lock service displays the prices offered for upcoming periods. The offers shown in the service change continuously, so it is worth tracking them. You must lock in a price at least 36 hours before the start of the price lock period. There is no separate additional fee for price locking, as the service is included in the Spot Smart contract. 

The consumption impact means you can still influence your energy price 

Your final energy price is not determined by the lock price alone. It also includes a consumption impact, which reflects the timing of your electricity use in relation to spot prices. 

Scheduling EV charging or heating of your house for lower-priced periods therefore still matters during a price lock period. If you are used to monitoring prices and timing your consumption, you will continue to benefit from doing so. However, price locking can reduce stress when spot electricity prices are high, as your price is not determined solely by market prices. 

Electricity use concentrated to periods of low spot prices can lower your energy price, while use concentrated to expensive periods can increase it. However, the impact of timing is typically smaller than with a regular spot-price electricity contract, still making your electricity bills more predictable. The consumption impact lands typically at ±2 c/kWh. 

The right lock price depends on your needs 

There is no way to know in advance when the lowest price will be available, and the prices offered for locking change continuously with the electricity market. According to Frants, it is more important to assess whether the price offered suits your household finances. 

“If you are happy with the price offered, it may make sense to lock it in,” Frants summarizes. 

When making your decision, consider not only the price but also how important predictable electricity bills are to you. If rising prices would make it difficult to cover everyday expenses, locking in a price can help you prepare for the future. What matters is how much price variation your household finances can tolerate. 

Also consider when you need predictability. Is locking the price for one month enough, or would you prefer to agree on a price level for an entire quarter? The right period depends on when you want protection against price fluctuations and what price you are willing to agree on. At the same time, you must accept that the agreed lock rate will not come down even if spot prices later decrease. However, you are in charge of making price locks, so only you decide when you lock the price and for what period. 

Locking in a price also requires commitment 

Once you make a price lock, your contract becomes fixed-term until the end of the price lock period. If you have made several price locks, the fixed term ends at the end of the price lock period that extends furthest into the future, regardless of the order in which the price locks were made. What matters is therefore not the most recently made price lock, but the period that ends last. 

Once all price lock periods have ended, the contract becomes open-ended again, with pricing based on spot prices. 

Expert: Jakob Frants, Sales Manager at Vaasan Sähkö 

Jakob works as a Sales Manager at Vaasan Sähkö and helps customers find the electricity contract that best suits their situation. He has extensive experience of electricity markets and different types of contracts.