€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 are dormant energy contracts?

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.

CREG infographs

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.

Infograph for residential customers showing the number of active and dormant power contracts

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.

Price differences: explanations

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.

Potential savings by switching from the most expensive to the cheapest provider

Solutions exist to reduce your bill!

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:

  1. CREG-certified price comparison sites/tools
  2. Group purchases of electricity and gas

Here we present their respective benefits and, in our opinion, the people to whom these two solutions are addressed.

1. CREG-certified price comparison sites/tools

Our certified energy price comparison site/tool was recently presented on television during the RTL-TVI news offering many benefits:

  • Quick, user-friendly process: finding out the suppliers’ current deals on a price comparison website is very quick. In just a few clicks, the results are obtained according to the individual’s location and consumption.
  • Personalized support: at Energyprice.be, the user will find the deal that best suits their choices. Moreover, he or she may conclude the contract directly on the internet, alone or with the help of an energy consultant, by phone (0800 37 456), by e-mail (info@energyprice.be) or via a chat (instant messaging available on our website).
  • Official rates always up to date: Certified by the CREG, Energyprice.be must update the tariffs of the gas and electricity suppliers each month, throughout the year. So you are always guaranteed to compare all of the deals offered by all of the providers operating in Belgium.
  • Promotions, discounts and exclusive benefits: our price comparison website also takes into account the sometimes exclusive promotions of the various suppliers. Each visitor can be sure to get the lowest price based on their consumption profile.
  • After sales service: in addition to helping you choose the right provider according to your consumption profile, our Energyprice.be energy consultants are at your disposal throughout the duration of your electricity and/or gas contract, including if you have problems with your provider.

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.

2. Group purchases of electricity and gas

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:

  • Bargaining power is very important: the principle is of joint procurement, namely gathering a large number of households to negotiate attractive prices from electricity and gas suppliers. The more households registered for a bulk purchase, the easier it is for the organizers to negotiate lower “traditional” prices with the suppliers. And consequently, there are always savings to be made.
  • Customized deal: by registering for a group purchase, free and without any commitment, consumers are sure to get a customized deal based on their consumption profile.
  • Market analysis: by participating in a group purchase, the citizen leaves it to the organizer to analyse the market and to survey the suppliers to get the best price, the greenest electricity deal..
  • Personalized support: if someone has difficulty deciphering their bills or if they have one of the 876 existing dormant energy contracts, group purchasing is the solution. Indeed, through group purchasing, personalized support is offered throughout the transaction. Whether by e-mail, by phone (0800 37 456), or by regular mail or via a chat.
  • Awareness of the energy sector: the organizers of group purchases often offer free training about the energy sector. The purpose of this training is to make the Belgian citizens proactive and aware of this constantly changing market.

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).

What are the key points of the CREG’s warning?

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.

Sources

  •  “Energy prices: beware of dormant contracts”, article by the RTBF
  • “Some 500,000 Belgians pay too much for their power, according to the Creg”, article by Sudinfo.be
  • “500,000 Belgians pay too much for their gas and electricity: here’s what they could save each year”, article by RTL Info
  • “Gas: a difference of 700 euros depending on the contract”, article by Vif
  • “You may be paying too much for your gas and your electricity: A difference of 700 euros for the same contract”, article by La Libre
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