Only one energy supplier still offers fixed contract: Should you switch?

Only one energy supplier still offers fixed contract: Should you switch?
Credit: Belga

As a result of the sky-high energy prices, more people have a variable contract for natural gas than a fixed-rate one for the first time in five years, according to figures by the Flemish Electricity and Gas Market Regulator (VREG).

The percentage of households in Flanders that had a fixed energy contract has traditionally been a lot higher than those with a variable one. Since 2013, nearly 75% of concluded electricity contracts had a fixed tariff and while the predominance was not as pronounced for natural gas, the share of fixed contracts has also fluctuated just above 60% in recent years.

Now, however, most energy suppliers have stopped offering fixed-rate tariffs: "Consumers whose fixed contracts expire are switched to a variable one by suppliers," Jordi Van Paemel, energy expert for consumer protection organisation Test-Achats, told De Morgen. "This is because they simply no longer offer fixed contracts."

Complete turnaround

In the space of just a few months, the trend was completely reversed, according to figures from the VREG: in the second quarter of 2000 (April-May-June), more natural gas contracts were concluded with a variable rate than with a fixed rate formula for the first time in five years.

58.1% of the contracts were concluded at a variable price, compared with 41.9% at a fixed formula. The number of variable contracts for electricity is also increasing significantly: the variable portion now accounts for 40% of contracts. One year ago, only 28.3% of the contracts concluded were at a variable rate.

Unsurprisingly, the turnaround has to do with the high energy prices. Since the explosive growth in price levels in the autumn of 2021, energy suppliers have been trying to push their customers in the direction of variable contracts.

Consumers shoulder the risk

While nearly all suppliers used to offer consumers variable as well as fixed contract options, Luminus is currently the only one that still offers a fixed natural gas tariff for households. For electricity, Luminus and TotalEnergies are the only two still offering a fixed contract.

"For the suppliers, the risk has become too great. A fixed contract means that they reserve your expected energy volume in advance to be sure that they can provide enough energy," Van Paemel said. "That costs a lot of money at current levels."

However, as there is no termination fee in Belgium, those fixed-contrast customers can simply leave when prices fall again. "And then the supplier is left with its dearly purchased energy." With a variable contract, on the other hand, the risk rests entirely on the shoulders of the consumer because every price increase is passed on, explained Van Paemel.

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"Traditionally, the Flemish people preferred to opt for a fixed contract: it gives the consumer peace of mind, because it is simple and you know what price you will be paying for your consumption," he said. "With a variable rate, it is almost impossible to check your bill because it is so complicated."

Still, in most cases, it is would not be a good idea to start considering one of the rare fixed rates on the market at the moment. "The fixed tariffs that are still on offer are extremely expensive," said Van Paemel. "For the fixed rate for natural gas at Luminus, the average consumption amounts to €500 per month. That is unaffordable."

Additionally, more fixed tariffs are not expected to come back to the energy market any time soon. "According to a survey we conducted, none of the major suppliers are planning to offer a fixed tariff formula again in the short term."

Test-Achats, however, emphasised that measures against this should be taken by the authorities. "It is irresponsible that, via these variable formulas, the price increases should fall entirely on the consumer."

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