€700 difference between the most expensive and the cheapest energy contracts! Broadcast in several media on Friday, 19 May, the information was a bombshell in Wallonia.
The amount, which appeared in many news programmes but also in print, was calculated by the CREG price comparison tool, “CREG Scan”. However, solutions to avoid these dormant contracts do exist, such as certified price comparison sites and tools or group purchases.
Here, we analyse the causes of these substantial differences and the solutions available to households that continue to pay too high a price for their energy.
What does the name “dormant contract” or “extension contract” mean? In reality, the explanation is less complex than it might seem.
A dormant power contract is a contract that has reached expiry and whose prices have been maintained despite the fall in gas and electricity prices that has occurred in the meantime in the markets. In other words, the price at which the consumer subscribes to their contract at the time is still applied today. This is a real problem for consumers because electricity and gas rates have greatly decreased in recent years. Here we are talking about the unit prices of gas and electricity, not the total energy bill, which has risen as a direct result of increases in transmission costs, distribution costs and the rise in VAT from 6 to 21% in September 2015.
Every month, the CREG publishes a graph highlighting the prices of energy contracts in Belgium, from the cheapest to the most expensive deal. These graphs to some extent act as a barometer of energy providers in Belgium over the months.
New in May, the regulator decided to also take into account these famous dormant tariff formulas. In fact, about 500,000 contracts in Wallonia are still dormant. The problem? They are both prohibitive and far more expensive than the current deals on the market. In some cases, there is a difference of over €700 for a combined electricity and gas deal. This is a huge amount for the energy budget of the Walloon people. It is a wise choice by the CREG to take these extension contracts into account because currently there are 876 extension contracts for 71 active rate cards in Wallonia.
How is it possible to get such great differences in price for gas and especially electricity, which could be likened to a basic need in 2017? There is a simple explanation: a few years ago, gas and electricity tariffs were much higher than now. These last few years, market prices (wholesale prices) of electricity and gas have declined sharply. In fact, between early 2014 and May 2017, the benchmark price for gas fell from €28 to €16/MWh, that is a decrease of 43%. A similar decrease has been seen for electricity.
Let’s look at an example: a family of 3 entered into an electricity contract in 2010 at a fixed price of 10 c€/kWh (standard meter) and a gas contract at a fixed unit price of 5 c€/kWh for a period of one year. In 2011, this contract was extended automatically at the same price and this has gone on year after year. Therefore, in 2017, this family still pays its electricity and gas at the same rates, while the average fixed cost in May 2017 is 5.243 c €/kWh (standard meter) and 2.657 c€/kWh for gas. In financial terms, this means a difference of €166 in electricity and €469 in gas. That’s a difference of €635 for this family in 2017. However, electricity rates and gas rates began to fall in 2014. So that means that this family has probably paid several thousand euros too much for its power.
Huge differences, which largely explain the gap of €700.
To help consumers make the right choice and break away from “energy stagnation”, some solutions do exist. Two alternatives are available to all those who wish to become consum’actors:
Here we present their respective benefits and, in our opinion, the people to whom these two solutions are addressed.
Our certified energy price comparison site/tool was recently presented on television during the RTL-TVI news offering many benefits:
The price comparison website is, therefore, a valuable tool that is intended for people familiar with the Internet who want to compare their tariff formula year after year, with or without the help of one of our staff.
Now let’s look at group purchases of electricity and gas, also presented in the media, including RTBF news. Again, there are tonnes of benefits although joint purchasing targets a significantly different type of consumer:
Group purchases are therefore an essential and indispensable help for people who have a dormant gas and/or electricity contract and/or want help to understand their electricity and gas bills. Group purchase energy consultants are also available throughout the year, either by e-mail (Info@wikipower.be), by phone (0800 37 456) or via chat (instant messaging available on our website).
In view of the CREG infographs, it is clear that major differences still exist between the most expensive and the most competitive electricity tariffs. Notably due to dormant energy contracts, this can still be avoided. Indeed, solutions do exist to ensure the best energy price year after year. Consumers can use online price comparison websites certified by the CREG or participate in group purchasing to get the best possible customized support. By choosing one of these two solutions, Belgian citizens are sure to get the best deal. They become true consum’actors, aware of the constant and rapid changes in the Belgian energy markets.