Energy market 3 May 2022 • 6 minutes
In mid-October, the government met to discuss the federal budget for 2022. A number of decisions were taken in all sectors, including energy. We take a look at all these new budget agreement, from expanding the social tariff and simplifying energy bills to ending the automatic renewal of dormant contracts.
In February 2021, in the midst of the coronavirus pandemic, the federal government decided to widen access to the social tariff to include pensioners, single-parent families experiencing financial difficulties, and anyone with a gross annual income of 20,000 euro or less.
Since mid-October, it’s official: the expansion of this measure is being extended until March 2022, which will allow beneficiaries to reduce their energy bills by at least 720 euro. This measure affects around 20% of Belgian households, in other words 2 million people.
Reminder: what is the social tariff? It is a specific tariff for recipients of social integration income, recipients of guaranteed income for elderly persons (GRAPA), and people with disabilities. The price per kWh is set by CREG, the Belgian federal energy regulator, and, in addition to being the cheapest on the market, it is the same for all suppliers in Belgium. This means that social tariff recipients are free to choose their preferred supplier.
In addition to expanding the social tariff, the government has decided to grant energy vouchers worth 80 euro each to help the most disadvantaged households deal with energy price rises.
For several months now, electricity and gas prices have continued to rise, due, in part, to the post-lockdown economic recovery and to some unseasonably harsh weather conditions.
In April 2021, the government formalised the simplification of Belgian energy bills from 1 January 2022. For 41% of the population, the data and information appearing on their gas and electricity bills is often too complex, meaning that some people have problems understanding it.
As a result, a Royal Decree has been introduced which states that:
The CPAS (public social welfare) centres have decided to launch a practical help scheme for households which do not qualify for the social tariff. So, if you are having problems paying your gas and/or electricity bills, you will be able to submit an application to your local CPAS centre to receive assistance from them.
Regardless of the policy of your particular CPAS office, you will be able to receive:
The office of Pierre-Yves Dermagne, Deputy Prime Minister and Minister for the Economy and Employment, which is responsible for this measure, has decided to allocate 16 million euro in funding for this Gas-Electricity Fund project.
From 1 January 2022, the federal contributions applied to energy bills will be converted into excise duties. This element of the bill accounts for 5% of its total, on average. This reform, which is considered the most significant in terms of energy for the past ten years, will reduce the federal share of around 30 euro per household, except for social tariff recipients. The main effect of this new measure is that the federal element of energy bills will no longer increase, as is currently the case.
The annual fixed fee corresponds to the subscription fee charged by your supplier and covers costs such as sending bills, the supplier’s customer service operation, and the costs incurred in supplying gas and electricity.
In recent months, much has been written about this portion of the bill. The issue is that the three current systems for billing the fee are deemed unfair and sometimes detrimental to the consumer. The current systems are as follows:
An agreement has therefore been implemented for variable-price contracts, stipulating that the annual fixed fee must now be billed based on the third option, namely: pro rata billing according to the number of days of supply. This option is considered the most advantageous for the customer as they will only pay for the number of days of supply they have received from their supplier.
The government has decided, in its agreement, to prohibit the unilateral increasing of monthly instalments. This means that the consumer will be able to decide for themselves whether to increase their instalment amount.
As a reminder, a monthly instalment is a forecast of your annual consumption and is based on the consumption history of your home. It is only after your annual meter reading, when you receive your adjustment bill, that you will be refunded if you have paid too much in instalments compared with your consumption or, conversely, that you will have to pay the outstanding amount due to your supplier.
Last May, the Chamber formalised the end of the automatic renewal of dormant contracts. Dormant contracts are contracts that no longer exist on the market. So, when they expire, some suppliers had adopted the habit of renewing them automatically and applying a much higher price per kWh than the initial price.
As a result, a charter has been implemented stipulating that, at the end of the contract, if it is no longer available on the market, the supplier is legally obliged to inform their customer accordingly and offer them a cheaper deal. This means that, two months before the contract expires, the supplier must send the consumer an email detailing this information, which will allow the customer to negotiate their new energy contract more easily and in whatever way they see fit.