On Thursday 27 May 2021, the Chamber approved the bill to ban automatic renewal of dormant energy contracts from 2022. As a result of this decision, affected households will be able to save up to €1,000 a year on their gas and electricity bills. But what actually is a dormant contract and what does federal energy regulator CREG say about them?
A dormant contract is a gas or electricity contract that no longer exists on the current market. As a result, the customer who originally took out the contract is given a new, usually more expensive, contract by their energy supplier. This is what is meant by automatic renewal. Essentially, the customer will continue to pay their original contract price, in other words a price which is not updated in line with current market rates and is therefore more expensive.
At present, more than 500,000 Belgian households are victims of this system and are therefore paying high prices. This loophole not only impacts their budget but also complicates their ability to compare their contract with the current rates introduced by the various energy suppliers. In fact, since the gas or electricity contract in question is old, it is not easy for the customer to find the corresponding rate card. Consumers are once again being disadvantaged by this practice, particularly if they are not necessarily keeping an eye out for the latest tempting offers in the field.
At the beginning of the year, federal energy regulator CREG stated that it was reassured by the bill to ban dormant contracts. In a special report, it sets out the savings that consumers will be able to make as a result of this practice being abolished.
Taking the figures for December 2020, and based on an average annual consumption of 3,500 kWh/year for electricity and 23,260 kWh/year for gas, the study demonstrates that an average household switching from a dormant contract to one of the cheapest contracts on the market could make annual savings of up to €300 on their electricity and €800 on their gas. This represents an average saving of more than €1,000 over a full year.
This law will come into force on 1 January 2022. But what does it say, exactly? Firstly, it states that if your current energy contract no longer exists, your supplier will be obliged to inform you and to offer you an alternative, cheaper price plan for your portfolio.
Then, two months before your contract expires, your supplier must send you a reminder letter offering you updated rates. You will therefore have more freedom to renegotiate your contract as you see fit. If you do not respond to your supplier’s offer in time, they must renew your contract automatically, ensuring that they choose their cheapest package.
It is important to state that this law applies both to residential customers and to business leaders running SMEs. Lastly, regarding indefinite energy contracts, the supplier will have until 1 March 2022 to comply with the law, in other words two months after it comes into effect.
Are you a victim of a dormant contract, or do you simply want to save money on your energy bills? The best alternative we can offer is to use a professional price comparison site.
At Energyprice.be, our comparison tool is certified by the CREG, which means that the search you carry out on our site is guaranteed to be totally objective and impartial. Using our constantly updated database, you can compare all the offers on the market and choose the one that best suits your lifestyle and your annual consumption.
Perhaps you simply want to find out whether your current deal is still up there with the best. If so, CREG Scan is the tool you need! If you enter your contact details and some information about your contract, you can find out whether your contract is still favourable and which offers are the most competitive on the current market.