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One million households pay too much for electricity

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Almost one million households in Belgium are paying up to €500 a year too much for their energy, according to the industry regulator CREG.

The main culprit is what the regulator refers to as “sleeping contracts” – where instead of regularly checking for the best deal, customers simply let their existing contract continue.

That results in their missing out on the frequent movements in the market.

In the course of 2020, electricity prices for domestic consumers have gone down by 10% across the board, while prices for natural gas fell by 26%. But not all suppliers offer the same reductions.

Many families are not taking advantage of those price reductions, because they are left with expensive contracts from the past,” said Laurent Jacquet, a member of the CREG board.

They never switch suppliers, or if they do switch, they choose the most expensive contracts in the market. Belgians are increasingly switching suppliers, but they do not always make the optimal choice. The terms and conditions and clauses of contracts are extremely complex and sometimes difficult to compare.”

Part of the role of CREG is to ensure there is enough competition in the energy market, and the regulator concludes there is not. Some 900,000 households, or 18% of the total, have not changed their energy supplier even once since the market was liberalised in 2007. Instead, they carry on year after year with outdated contracts that are automatically renewed every year.

For gas contracts, the number who have never switched provider stands at 13%.

The government has now decided the sleeping contracts have to go, and this week energy minister Tinne Van der Straeten (Groen), economy minister Pierre-Yves Dermagne (PS) and secretary of state for consumer protection Eva De Bleeker (Open VLD) met with CEOs of energy companies, and gave them the mission of coming forward by the end of January with a proposal for how the problem might be solved.

The CREG itself has a simple proposal: all energy contracts must be limited in time, and must at the end of their term be replaced by a new contract – even if it is with the same supplier. While the time limit would have to be worked out, the proposal has the advantage of removing inertia from the equation, by ensuring that customers are aware of what they are paying, and of their right to switch supplier at any time.

That would go hand in hand with increased promotion for the CREG-Scan, an online instrument that allows consumers to compare the offers from various suppliers for their energy needs.

Alan Hope
The Brussels Times