Electricity and gas: invoice 3 May 2022 • 8 minutes
Every month, the federal regulator (CREG) and the regional regulators (VREG, CWaPE and Brugel) publish a dashboard comparing Belgian energy prices with those in neighbouring countries.
For October 2021, CREG highlighted that the average Belgian gas bill (2,488 euro) is much cheaper than that of our Dutch neighbours (3,713.98 euro). But we are less well off than French households (2,239.99 euro) and German households (1,560 euro). As for the British, their gas bills are the lowest (1,290.12 euro). However, the conclusions are different when we look at the breakdown by Belgian Region. The Flemish pay 2,366.61 euro per year for gas, while
those in Brussels pay around 2,458,39 euro and those in Wallonia 2,639 euro.
How can such a disparity be explained between the countries, and even between the Regions, in the study? 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 months, you could be in for a nasty surprise if you look at them today. In August 2021 (last available data), the annual Belgian gas bill had increased by 17% over the previous 12 months, which is a difference of 70 euro between the two periods. The causes are said to be economic. There is, of course, the post-Covid economic recovery, as well as the unfavourable weather conditions in the spring and summer.
However, when we compare Belgium with the neighbouring countries, the gas prices per MWh recorded during the first half of 2021 were not highest in Belgium.
|Average price per MWh|
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 countries, apart from the United Kingdom.
For the energy component, Flanders is the same as the United Kingdom. However, our taxes are higher than theirs. But the big tax winners are the Netherlands.
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 subject to surcharges.
Here is the picture for the average gas prices for each country in terms of proportion:
It can be seen that, in 2021, the energy component of the gas bill is still the highest of all the cost elements, representing on average 28% to 51% of the total amount. Regarding network costs, these are all relatively high, ranging from 23% to 32% of the total bill amount, apart from the Netherlands, where the rate does not exceed 7%.
Finally, in terms of taxes, the United Kingdom has the lowest rate, with VAT representing only 5% of the final bill amount, compared with 17% in the other countries.
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 significant advantage: the port of Zeebrugge. This acts as a hub for the international gas route. It allows energy suppliers to purchase gas at competitive prices, which means that Belgian customers also benefit.
In the Netherlands, the tax rate has increased dramatically 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 is 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 the Europeans per gas molecule and for network maintenance.
In France, despite a liberalised 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.
Although gas prices in Belgium and Europe fell significantly in 2020, the same cannot be said for 2021. As explained at the beginning of this article, the post-lockdown economic recovery has been detrimental to the wholesale gas and electricity market and, consequently, to the wallets of Belgian households.
But, why has there been such inflation in less than a year? In addition to the economic recovery, there has also been a rise in the price per tonne of CO2, which increases energy production costs. The reduction in storage capacity in Europe is also an important factor since, today, the continent is now considered an importer, not an exporter, of gas, which puts pressure on gas prices. Lastly, Brexit has not helped relations between the European Union and the United Kingdom.
If your contract is expiring, the best strategy is to compare your energy contract. To do this, you can rely on the comparison sites set up by the national and regional regulators, such as CREG Scan or CompaCWaPE. You can also use the certified price comparison sites such as Energyprice.be, the first energy price comparison site to be certified by CREG.
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 relatively comfortable situation as regards gas prices compared with our neighbours, such as the Netherlands. Our country imposes few surcharges on gas prices, which gives us greater influence over the energy price.
However, rising energy prices affect us all, so you must remain vigilant and take time to analyse your bill and your contract before switching.
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.