How is the electricity rate established?

The price per kilowatt hour (kWh) is one of the key elements of an electricity bill. But why is it important? Are there different types? Energyprice.be can clarify this for you.

Summary

• What does an electricity bill consist of?
  1. The price of energy, i.e., the price of electricity
  2. The transmission and distribution tariffs
  3. Taxes and surcharges
• Different kWh prices depending on the type of electric meter
• What to choose: a fixed or variable electricity price?
• Two tips to discover the electricity tariff for you
  1. Choosing your electricity contract well
  2. Choosing your energy supplier well
• Comparison of the cost of electricity in Flanders and Wallonia
• Comparison of the cost of electricity in Brussels
• The evolution of electricity prices in Belgium
• How to pay less?

Talking about electricity consumption automatically means determining an energy budget. This exercise clearly means you have to consider your electricity needs, but there is another factor as well: the price. The lower it is, the less money you will need to spend for the same number of kWh. Logical, you might say. However, there are some subtleties involved that might change the situation.

What does an electricity bill consist of?

An electricity bill is divided into three parts, namely:

• the price of the energy itself,
• the transmission and distribution costs,
• and the taxes and surcharges.

These items make up the total electricity price charged to the consumer.

1. The energy price, in other words the price of the electricity

The energy price is set freely by the supplier and is based mainly on the wholesale market prices. It can therefore vary from one company to another. It includes the electricity price per kWh and the fee, also called the annual subscription. In addition, there are the costs incurred by the supplier as part of its obligation to purchase green certificates and, in Flanders, cogeneration certificates. Generally, this cost item is indicated on the bill as ‘Contribution to renewable energy’ or ‘Green energy costs’ and, where applicable, ‘Cogeneration costs’.

>> Which is the cheapest supplier?

2. The transmission and distribution prices

This component of the bill covers the costs of two energy market stakeholders:

• the electricity transmission system operator (TSO), i.e. Elia,
• and the distribution system operator (DSO) in the customer’s municipality. For information, the DSO was formerly referred to as the “intercommunal company”.

Unlike the energy price, the transmission and distribution prices are non-negotiable and must be approved by the Commission de Régulation de l’Électricité et du Gaz (CREG – gas and electricity regulatory commission). However, they can vary from one region to another, particularly depending on population density, as it will always be cheaper to supply electricity in towns and cities than in rural areas.

>> Free tool : check who your DSO is

3. Taxes and surcharges

This final bill item includes the amounts set by the federal State and the Regions. The supplier collects the sums due, since they handle the billing, but they then forward these amounts in full to the various authorities.

In summary, consumers have limited room for maneuver as they can only influence the energy price, in other words, the part left to the supplier’s discretion.

Different kWh prices depending on the type of electric meter

When establishing its price plans, the electricity supplier must consider a technical element: the electricity meter. In Belgium, there are three main types: the standard, the dual and the night rate only meter. Each is associated with a specific electricity price and allows consumers to make savings as long as they are used optimally.

The electricity price at night: when to use the dual and the night rate only meter

This is especially true for the dual meter. With two dials, it divides the hours in the day into two time periods: peak hours, corresponding to daytime on weekdays, and off-peak hours, corresponding to nights and weekend days. The aim is to encourage consumers to use their energy-intensive devices during off-peak hours in order to use the excess electricity produced at night in Belgium. To achieve this, the idea was to offer an attractive rate during this period. In return, the day rate for the dual meter is higher than the single rate for the standard meter.

As for the night rate only meter, this used by most people who have electric storage heaters. Its rate is generally equivalent to the off-peak rate for the day/night system.

Can’t decide between a standard and a dual meter?

Standard and dual meters meet different needs. So, before changing your electricity meter, review your habits and calculate your electricity consumption. If it is low, the standard rate will probably suit you best. If you have any doubt as to which type of meter to install, you can call us on 0800 37 369 or email us at info@energyprice.be.

What to choose: a fixed or variable electricity rate?

Most energy suppliers offer several kinds of contract. The consumer usually has a choice, for example, between a green electricity deal*, a 100% online deal, or a traditional deal. But one criterion goes beyond these specifics: the type of electricity price.

Fixed or variable, it influences not only the cost per kWh and the annual fee but also the guarantee given to the customer.

Characteristics of fixed and variable rates

A fixed rate ensures the same electricity price per kWh throughout the duration of the energy supply contract. In return for this security, suppliers often demand a higher annual fee. 

A variable rate is indexed quarterly or monthly. Consumers usually discover whether it has risen or fallen when they get their annual breakdown. The risk is that if the price has increased they will have to pay the difference, which may be substantial.

As a general rule, variable prices tend to be more attractive than fixed prices at the end of the contract as they carry more risk.

>> Read also: Fixed or variable prices? Which should you choose?

Which rate suits you best ?

To avoid a high energy bill, it is generally recommended that people who prefer security should choose a fixed rate for electricity. For natural gas, a variable rate may be more attractive as the natural gas rate is more stable.  However, this does not stop some energy suppliers from offering a more attractive gas price.

It is also worth noting that current events can affect the situation as well. So, if gas prices fall for some reason, it may be in your interest to choose a fixed price in order to freeze the price benefits over a long period. To find out more, please see our article on fixed and variable rates.

Two tips to find out the right the electricity rate for you

It is easy to be overwhelmed by the huge number of electricity deals available on the market. Across all regions, there are 388 deals for professionals and households!

This means there is a risk of choosing one at random, but nothing could be worse for your wallet. To save money, you must consider your needs before deciding which contract to take out. However, the financial aspect is not the only criterion that will determine which electricity supply deal you should choose. For example, it is just as important to check the supplier’s commercial and environmental policies as they may be incompatible with your deeply held convictions. Let us explain.

1. Choose your electricity contract carefully

If what you want is to pay as little as possible, you should be aware that some rate plans will suit you better than others. Some electricity contracts are aimed specifically at families and offer a high annual fee and a low price per kWh. In contrast, others are intended for people living alone. Because single-person households have low consumption levels, these contracts are associated with an attractive annual fee but a higher electricity rate.

In addition to this specific characteristic there are some other important criteria, such as the type of price (fixed or variable) and the conditions and duration of the contract.

Do you need help comparing electricity deals to find the one that suits your profile? Our staff are available to assist you by phone on 0800 37 369, from 9.00am to 12.30pm and from 1.30pm to 5.30pm, or by email at info@energyprice.be.

2. Choose your energy supplier carefully

If you’re finding it hard to distinguish between the different energy suppliers, here are some names that might help. 

>> See a list of all the electricity suppliers operating in Belgium

Companies like Engie, Octa+ and Mega all offer electricity deals, but that’s often where the similarity ends. When choosing between them, there are a number of factors you may need to consider:

• Customer service accessibility and quality;
• Means of paying bills;
• Promotions;
• The ergonomics of the website (simple and effective navigation, response to your needs and queries as a customer);
• The supplier’s purchasing and investment strategy: Most companies sell green electricity but few of them directly support the production of renewable energy. Often, they simply buy guarantees of origin. According to the Greenpeace ranking, some electricity suppliers are however an exception, like Ecopower, Eneco and Energy 2030.

As a reminder, you are under no obligation to choose the same supplier for electricity and gas.

Comparison of the cost of electricity in Flanders and Wallonia

To award a company the title of “best electricity company” is difficult, as everything depends on each individual’s own criteria. On the other hand, it is possible to find out which one offers the most attractive electricity price.

Below we set out the fixed rate flagship deals of the key electricity providers in Flanders and Wallonia.

Supplier	Name of the deal	Standard (c€/kWh)	Dual (c€/kWh)		Night rate only (c€/kWh)	Subscription (€/year)
			Day	Night
ENGIE	Easy Fixed	8.85	10.19	7.58	7.58	54.49
Luminus	Comfy Green	6.81	7.88	5.27	5.27	72.60
Lampiris	Top	6.51	7.76	5.45	5.49	69.00
Eneco	Sun & Wind Fixed	7.78	9.05	6.7	6.7	50.00
Essent	Green Fixed 1 year	11.2	12.67	10.12	10.12	69.95

Want to know which is the cheapest electricity deal on the market? Use our CREG-certified gas and electricity supplier comparison website!

Comparison of the cost of electricity in Brussels

Of all the major players in the energy market, is there one cheap electricity supplier that stands out?

Below are the key variable-rate deals of the five main energy suppliers in Brussels.

Supplier	Name of the deal	Standard (c€/kWh)	Dual (c€/kWh)		Night rate only (c€/kWh)	Subscription (€/year)
			Day	Night
Engie	Easy Indexed	7.30	8.92	5.50	5.50	60.50
Lampiris	Tip	8.51	9.56	7.56	7.58	39.99
Octa+	Activ+ Variable	6.17	6.58	5.61	5.61	50.00
Mega	Easy Variable	5.39	6.45	4.65	4.65	40.00

Changes in electricity prices in Belgium

In Belgium, the full liberalization of the energy market dates back to 2007. Although it was supposed to be beneficial to consumers, it does not seem to have had all the desired effects.

According to the CREG, the total electricity bill of a private individual increased by an average of 66.41% between 2007 and 2019. This can be explained mainly by the increase in renewable energy and cogeneration contributions, transmission and distribution prices, and public levies and taxes.

Over a one-year period (April 2019 to April 2020), however, the CREG observes a noticeable fall in electricity prices. In detail, the energy price component (left to the discretion of each supplier) has fallen by:

• 22.46% in Flanders (from c€31.39/kWh in 2019 to c€24.34/kWh in 2020);
• 21.31% in Wallonia (from c€31.34/kWh in 2019 to c€24.66/kWh in 2020);
• 25.54% in Brussels (from c€27.21/kWh in 2019 to c€20.26/kWh in 2020).

>> For more information on changing prices, please read this article: It’s time to switch energy contract

How to pay less?

In view of what are sometimes unfavorable rate changes, comparing the rates charged by electricity and gas suppliers is highly recommended – the aim is to find a low fixed price and take advantage of it for a long time.

If this is not possible due to the current situation, you can still enjoy attractive promotions and choose another deal once your promotions end. The good news is that cancelling an energy contract only takes a few minutes.

Taking advantage of attractive rates often requires switching electricity supplier as most reductions are reserved for new customers. But don’t worry: this procedure is quick and free.

>> Read also: Energy price comparison: when should you do it?

In addition, Energieprice.be is here to support you and help you pay less for your electricity. Simply call us on 0800 37 369, from 9.00am to 12.30pm and from 1.30pm to 5.30pm.

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