Dormant energy contracts: up to €1,204 too expensive!

A difference of €1,204 between the cheapest and the most expensive gas and electricity contracts! This level of potential savings particularly affects households with dormant contracts. Are you in this situation?

This amount, which has been featured in the news on TV and in the press, was calculated using the CREG price comparison tool “CREG Scan”. However, there are ways to avoid these dormant contracts, such as certified price comparison sites and group purchases.

Here, we analyze the causes of these substantial differences and the solutions available to households that are still paying too much for their energy.

What are dormant energy contracts?

What does the terms “dormant contract” or “extension contract” mean? In reality, the explanation is less complex than it might seem.

A dormant power contract is a contract that expired and whose prices have been maintained despite the fall in gas and electricity prices that has on the markets in the meantime. In other words, the price applicable when the consumer took out their contract is still applicable today despite its irrelevance.

This is a real problem for consumers because gas and electricity prices rates have fallen significantly in recent years. Let’s precise that this refers to the unit prices of gas and electricity, and not the total energy bill, which has risen as a direct result of increases in transmission costs, and distribution costs.

CREG infographs

Every month, the CREG publishes an infograph highlighting the prices of energy contracts in Belgium, from the cheapest to the most expensive. To a certain extent, these graphs serve as a barometer of energy providers in Belgium over time.

In this monthly barometer, the regulator decided to include the infamous dormant price plans as well.  According to a study carried out by the CREG, on December 2019, around 300,000 Belgian households have a dormant electricity contract and 170,000 are in the same situation regarding their gas contract. The problem is that these contracts are prohibitive and far more expensive than the current deals on the market. In some cases, there is a difference of over €1,204 for a combined gas (€864) and electricity (€304) deal – a colossal sum in terms of energy budget.

It is a wise decision by the CREG to include these extension contracts as there are currently 14,596 different supply contracts for 724 active rate cards in Belgium.

Price differences: explanations

How is it possible to have such huge price differences for gas and especially electricity, which possibly are a basic need in 2021?

If you suscribed an energy contract a long time ago and never changed it, chances are that the kWh prices were more expensive than the current market prices, at least before the global post-coronavirus increase. Let’s take a concrete example:

A family of 3 signed an electricity contract in 2010 at a fixed price of c€10/kWh (standard meter) and a gas contract at a fixed price of c€5/kWh for a period of one year.

In 2011, this contract was extended automatically at the same price and this has gone on year after year. As a result, in 2020, this family is still paying its electricity and gas at these same rates, while the average fixed cost in November 2020 is c€5.243/kWh (standard meter) and c€2.657/kWh for gas.

In financial terms, this means a difference of €166 in electricity and €469 in gas. That’s a difference of €635 for this family in 2020. However, gas and electricity rates began to fall in 2014. That means that this family has probably paid several thousand euro too much for its energy because of its dormant contact

These are enormous variations, which largely explain the €1,204 difference.

Solutions exist for reducing your bill!

Some solutions exist to help consumers make the right choice and break away from a certain “energy inertia”. Two alternatives are available to those wishing to become consum’actors:

1. CREG-certified price comparison sites
2. Group purchases of electricity and gas

We present the respective advantages of these alternatives below, along with the people for whom, in our view, they are intended.

1. CREG-certified price comparison sites

Our certified energy price comparison site, which was recently presented on television during the RTL-TVI news, offers many benefits:

• Quick, user-friendly process: checking the current supplier deals on a price comparison website is very quick. In just a few clicks, users can obtain their results based on their location and consumption profile.
• Personalized support: at Energyprice.be, users will find the deal that best suits their choices. They can also sign up for the contract immediately online, alone or with the help of an energy consultant, by phone (0800 37 456), by email (info@energyprice.be), or via chat (instant messaging available on our website).
• Official rates always up to date: since it is certified by the CREG, Energyprice.be is required to update the rates of the gas and electricity suppliers every month, throughout the year. So you can be sure that you are always comparing all the deals offered by all suppliers operating in Belgium.
• Promotions, discounts, and exclusive benefits: our price comparison website also includes the sometimes exclusive promotions of the various suppliers. Visitors can therefore be sure they are getting the lowest price based on their consumption profile.
• After-sales service: in addition to helping you choose the right provider according to your consumption profile, our Energyprice.be energy consultants are on hand throughout your electricity and/or gas contract, including if you have problems with your provider.

The price comparison website is, therefore, a valuable tool aimed at people who are familiar with the internet and who want to compare their price plan year on year, with or without the help of our staff.

2. Group purchases of electricity and gas

Now let’s look at group purchases of gas and electricity, which have also received media coverage, including on RTBF news. Here too, there are multiple benefits, although groups purchasing would fit to a noticeably different type of consumer:

• Bargaining power is very important: the principle is that of group purchases, namely bringing together a large number of households to negotiate attractive prices from gas and electricity suppliers. The higher the number of households registered for a bulk purchase, the easier it is for the organizers to negotiate lower “standard” prices with the suppliers. This means there are always savings to be made.
• Customized deal: by registering for a group purchase, free of charge and without obligation, consumers can be sure of getting a customized deal based on their consumption profile.
• Market analysis: by participating in a group purchase, citizens leave it to the organizer to analyze the market and sound out the suppliers to get the best price, the greenest electricity deal, etc.
• Personalized support: if someone has difficulty deciphering their bills or if they have one of the 876 existing dormant energy contracts, group purchasing is the solution. Indeed, they can receive personalized support throughout the transaction. It is available by email, by phone (0800 37 456), by regular mail, or via chat.
• Awareness of the energy sector: group purchase organisers often offer free training on the energy sector. The purpose of this training is to make Belgian citizens more proactive and aware of this constantly changing market.

Group purchases are therefore an essential and vital tool for people who have a dormant energy contract and/or who would like help to understand their electricity and gas bills. The group purchase energy consultants are also available year-round, either by email (info@wikipower.be), by phone (0800 37 456), or via chat (instant messaging).

What are the key points of the CREG’s warning?

In light of the CREG infographics, it is clear that substantial differences still exist at present between the cheapest and the most expensive gas and electricity deals. However, the problem, which mainly originated from dormant energy contracts, is avoidable. Solutions do exist to ensure that consumers get the best energy price year after year.

Consumers can use online price comparison websites certified by the CREG or participate in group purchasing to get the best possible customized support. By opting for one of these two solutions, Belgian citizens can be sure they are getting the best deal. In this way, they become true consum’actors, aware of the constant and rapid changes in the Belgian energy markets.

The end of automatic renewal of dormant contracts

Since the end of May 2021, it’s official: the tacit renewal of dormant contracts will end in 2022. This decision will allow Belgians to save up to 1000€ on their electricity and gas bills.

Therefore, the law stipulates that if the energy contract you have subscribed to no longer exists when it expires, your supplier will be obliged to inform you and offer you a more advantageous tariff form. Two months before the end of your contract, your supplier will have to send you a reminder letter and offer you alternatives in order to give you more freedom to negotiate a new tariff.

Read also : No more automatic renewal of dormant contracts !

Sources

•  “Energy prices: beware of dormant contracts”, article by the RTBF
• “Some 500,000 Belgians pay too much for their power, according to the Creg”, article by Sudinfo.be
• “500,000 Belgians pay too much for their gas and electricity: here’s what they could save each year”, article by RTL Info
• “Gas: a difference of 700 euros depending on the contract”, article by Vif
• “You may be paying too much for your gas and your electricity: A difference of 700 euros for the same contract”, article by La Libre