A year has passed since the energy commodities trader and convenience store network AS VIRŠI-A (hereinafter - Virši) started offering electricity trading services to households. By expanding and diversifying the solutions available to the public, over the course of the year, Virši has become the fourth largest electricity supplier in the household segment. According to the Company's observations, the key criterion for Latvian residents considers when choosing an electricity supplier is the price of the service. At the same time, the fall in electricity prices compared to 2022 levels has reduced people's attention to industry news and their interest in negotiating better deals.
Sharing his conclusions about the past year, Jānis Bethers, Head of Energy Department at Virši, emphasises: "Although the main criterion for Latvian citizens when choosing an electricity supplier is the financial benefit, on a daily basis we often see a situation where customers continue their cooperation with one supplier for years, overpaying for the services they receive. For instance, in August 2022, the electricity price reached its historical maximum of EUR 467.75 per megawatt. Therefore, that autumn, due to uncertainty about future events, it was understandable that residents wanted to agree to a fixed electricity price. Currently, a large proportion of residents have concluded long-term contracts since that time for five, seven and up to ten years at very high prices, significantly from current levels. We often hear that, assuming that the terms and conditions of the concluded contract are valid until the end of its operating term, residents continue to pay the specified amount, not even realising that they can terminate the contract without any contractual fine being imposed after the first two years.”
The Cabinet of Ministers "Regulations on the Sale and Usage of Electricity" stipulate that if the electricity trading period specified in the contract exceeds two years, an early termination fee can only be applied during the first two years of the contract period. In other words, once two years have passed since the contract was concluded, the customer is entitled to terminate the agreement without incurring a penalty.
The second most common reason for staying with an existing provider is habit and a reluctance to change familiar and predictable routines. "Everything that is familiar and well-known feels safer to people, which is why customers are often willing to overpay to avoid giving up a routine that has been familiar for years. At the same time, switching providers is a relatively simple process that can provide electricity consumers with a competitive offer and flexible cooperation conditions," explains the expert.
In the last two years, the market has not only witnessed a significant reduction in prices, but also an expansion in the range of contract durations. For example, this year suppliers have offered 6, 12, 15 and 18-month contracts, which are shorter than the usual 24-month offer.
It is worth remembering that you can change electricity supplier once a month - on the 1st of each month - and you have to reach an agreement with the new electricity supplier by the 9th of the month. In Latvia, switching is still a straightforward process, fully facilitated by the chosen supplier, without the need for any additional actions.
About Virši:
Virši is a rapidly growing local energy commodities trader and convenience store network with 29 years of experience. Currently, Virši has 82 sales points, 79 of which are service stations, and employs more than 850 people across Latvia. Since 11 November 2021, the shares of AS VIRŠI-A have been listed on the Nasdaq Riga First North Alternative Market.
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