Gas prices in Belgium have been falling for more than a year and a half. As a result, Belgian gas bills are among the lowest in Europe! Analysis, comparisons, and advice: find out what this means for your finances.
In May 2020, the federal regulator (CREG) and the regional regulators (VREG, CWaPE, and Brugel) published a joint study. This compared energy prices in Belgium with those in neighboring countries, as at 1 January 2020.
This highlighted the fact that the average Belgian gas bill (1,056 euro) is much cheaper than that of our Dutch neighbors, who pay nearly double that amount (2,088 euro). We are also better off than French households (1,542 euro) and German households (1,341 euro). It is only the British who have lower bills than ours (1,015 euro), but the difference between the two is small.
However, the conclusions are different when we look at the breakdown by Belgian Region. The Flemish spend less than 1,000 euro per year on gas (915 euro to be precise), whereas people in Wallonia have to pay 1,182 euro annually.
How can we explain such a disparity between the countries in the study, or even between the Regions? What should you do if your bill is higher than the Belgian average? What influence do you have? Energyprice.be has investigated.
To understand the reason for the differences observed between countries, you first need to understand the composition of a gas bill. And that’s no easy task! The main difficulty comes from the fact that each of the countries observed includes different considerations when calculating the final price charged. However, it is still possible to see four main components that always recur:
This is the price of the actual energy molecule. It is determined freely by the supplier, which means it varies from one supplier to another. It is the only one of the four components that can be negotiated according to customer needs.
None of the countries observed are exempt from value added tax. Whenever goods or services are sold to individuals, VAT is applied. However, the VAT percentage differs from one country to another, which can create significant differences.
This component remunerates the transmission system operators (TSOs) and the distribution network operators (DNOs). Unlike the energy price, the system costs are non-negotiable. In Belgium, they have to be approved by the relevant federal and regional regulators. It is worth noting that they fluctuate from one geographic area to another based on various criteria, such as population density or legislation.
All the other costs or charges are grouped into this category. This component varies hugely from country to country according to their energy policies. This means it is complicated to detail precisely the cost items they cover. In Belgium, this category includes fees and surcharges, such as everything related to investment in renewable energy.
If you haven’t been paying attention to gas prices in recent years, you may be in for a nice surprise if you look at them today. As at 30 September 2020 (last available data), the annual Belgian gas bill had fallen by 39% over the previous 24 months, which is a difference of 558 euro between the two periods. It had not been at that level for 10 years.
The causes are understood to be economic. There is, of course, the 2020 health crisis, but, before that, there had also been favorable weather conditions for two years in a row. However, the neighboring countries, which are at the same latitude, did not record exactly the same trends over this period. As a result, as at 1 January 2020, the cost of gas in Belgium had fallen to the same level as in the United Kingdom. This meant it had become particularly competitive compared with Germany, France, and the Netherlands. Let’s try to understand where these price differences really come from.
|Average price per MWh (01/01/2020)|
|Belgium – Brussels||€46.03|
|Belgium – Flanders||€39.35|
|Belgium – Wallonia||€50.80|
Let’s look at the results of the regulators’ study in more detail. One thing is instantly clear: all of the bill components are generally lower in Belgium than in the other four countries.
For the energy component, it is only the Germans that enjoy a slightly better price than our three Belgian regions. However, they are subject to higher charges and network costs.
If we take a closer look at the transmission and distribution cost component, we can see that the differences between the countries are insignificant, with the exception of the Netherlands. Dutch households actually enjoy very low network costs, but in return, they are hit hard with surcharges. These make up 45% of their bills. At the end of the day, Belgians pay 49% less than the Dutch to consume natural gas.
Here is the picture for the average gas prices for each country in terms of proportion:
It is clear that the Flemish and Brussels Regions have two major assets:
However, it is worth noting that these observations are less applicable to Walloon consumers. Remember, however, that in absolute terms the final gas price in Wallonia is still cheaper than in Germany, France, and the Netherlands.
This clearly shows, therefore, that the Belgians have a greater ability to control their bills. Not only do they pay a relatively low rate compared with the other countries observed, but they can also influence the amount of their bills to a greater extent by renegotiating the price of the energy component. Choosing your energy contract carefully can therefore lead to significant savings.
The reasons behind such price differences are complex and depend on a range of factors. Nevertheless, we will try to provide some explanations for these disparities. This list is not exhaustive.
Firstly, it is important to understand that the origin of the gas that flows through the European networks is not the same everywhere. In Belgium, for instance, we do not produce natural gas; we import it. And the prices fluctuate depending on its place of origin. However, the country has a considerable advantage: the port of Zeebrugge. This acts as a hub for the international gas route and means that energy suppliers can purchase gas at competitive prices. As a result, Belgian customers also benefit.
In the Netherlands, the tax rate has risen hugely in recent years in order to finance the transition to renewable energies. This explains why the gas price has reached such a level. However, the cost of the energy component may be surprising, given that the country produces its own gas.
In the United Kingdom, the policies are more liberal. The British are clearly subject to lower taxes than their European counterparts, whereas they pay roughly the same amount as them per gas molecule and for network maintenance.
In France, despite having had a liberalized market since 2007, few suppliers can compete with Engie and EDF, the country’s historical suppliers. This may explain why there is little pressure on the price of the energy component.
While gas prices have fallen in the neighboring countries observed in recent months, it is in Belgium that the most spectacular fall has been recorded.
Laurent Jacquet gave the following reasons for this fall in gas prices in our country. Although he expressed these views in September 2019, his words are still relevant today.
Finally, we cannot ignore the consequences of the terrible health emergency that has affected the world in 2020. The resulting population lockdowns caused the oil price to plunge into the red. The falling oil price also brought down the price of the other energies, in other words, gas and electricity.
Given that, since mid-October, Europe has been in the grip of the second wave of the COVID-19 pandemic, it is likely that prices will not rise immediately.
Prices are falling, but some of you may not be seeing this in your gas bills. If that’s the case with you, it would be worth checking your rates as soon as possible. If they are higher than the average for your Region or, worse still, than the rate for the countries observed above, it’s time to switch contract immediately.
This type of situation particularly affects households that may have signed a fixed-rate energy contract more than a year ago. This would mean that their rates have stayed the same, whereas the average gas bill has fallen by 16% compared with September 2019, and by 39% compared with September 2018.
>> Read also: How do I switch my energy contract?
Belgians are in a comfortable position as far as gas prices are concerned. Our country imposes few surcharges on the price of gas, which gives us greater influence over the energy price.
In addition, the economic, weather and logistics conditions mean that we can take advantage of particularly low rates at the moment.
If you haven’t changed your gas contract for more than a year, it is high time you did so. You’ll end up with some very attractive savings.
Here is a reminder of some useful information concerning the natural gas market in our country.
The average gas consumption for a Belgian household is equivalent to around 23,260 kilowatt-hours (kWh) per year. But you may be used to visualizing your gas consumption in terms of volume, in other words, measured in cubic meters (m3). To convert from one unit to the other, you need to remember that 1m3 is between 9.53 and 12.79 kWh, depending on its calorific value.
The study commissioned by the regulators mentioned previously in this article is based on this basic consumption. To make the comparison relevant, it assumes that it is identical in the neighboring countries.
The gas price varies by type of contract and by supplier. The suppliers determine the prices each month based on the market trends. For further information, please see our documentation on this subject.Respond!