Fixed-price energy contracts that were signed last year are significantly more expensive than those consumers can now get. People who trade their 2023 fixed-price contract for a new one can save over €800 on an annual basis, according to Federal Energy Regulator CREG.
At the end of summer 2022, prices for both gas and electricity peaked following Russia's invasion of Ukraine and the subsequent energy crisis, which resulted in the market becoming so unpredictable that suppliers stopped offering fixed-price contracts altogether in the winter of 2022-2023.
However, energy prices began a steady decline in January 2023, a decline that continued through the year and even through the past winter months – normally a period when energy prices rise.
"Since December 2023, prices have fallen another 10% every month," said CREG's Kurt Hernot told VRT.
Saving over €800 per year
In practice, that means that people who took out a fixed-price energy contract in 2023 are now paying quite a lot and could save an average of over €800 a year by switching to a new contract.
"We can see in March 2024 that prices have dropped significantly," said Hernot. "For an average family, the difference between a 2023 fixed contract versus a 2024 fixed contract comes down to a possible saving of €500 for natural gas, and up to €300 for electricity."
Those switching to a variable-price contract can save even more. A fixed-price contract always includes a kind of "risk premium" – a cost consumers have to pay to be guaranteed the same price for one year, for example. For variable contracts, however, this cost does not exist.
Currently, a variable contract for gas and electricity combined is on average €450 cheaper over the course of a year than a fixed contract.
Credit: Nicolas Maeterlinck/Belga.
Whether the prices have dropped as low as they can go and clients would do well to lock the current prices in a fixed-rate contract for a longer period before they start rising again is difficult to predict, said Hernot.
"I do not have a crystal ball and it is up to the consumer to choose between a fixed or variable price," he said. "But we do feel that we are quietly getting to the bottom of the price drop. I rather expect a stabilisation now and then maybe a slight increase next month. But again, we will have to wait and see."
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Incidentally, the number of different contracts has also risen again since the peak of the energy crisis, especially among variable contracts. For electricity, there are now more than 60 different contracts on the market (across Belgium), and for natural gas there are more than 40.
For fixed-price contracts, there are about 20 contracts, compared to zero in the winter of 2023.
The differences between all these formulas can be considerable, stressed CREG, which urges people to use its 'CREG scan' tool to compare providers before signing a contract. "The difference between the most expensive and the cheapest formula can amount to as much as €400 on an annual basis."
