The federal budget agreement: what is changing for the energy sector

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.

Social tariff expanded until the end of March 2022

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.

Energy voucher granted for social tariff recipients

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.

Simplified energy bills in 2022

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:

• Bills must now be no longer than two sides of an A4 sheet of paper;
• All the useful information concerning the consumer will be displayed on the front of the bill. The term “useful information” includes the amount to be paid and the payment deadline;
• The supplier will no longer be able to stipulate how the bill is sent. This means that if you want to receive a paper copy, you will be able to request one without your supplier being able to impose any restrictions;
• The bill must clearly state that, in addition to what is shown on their bill, customers can find further information via their digital customer space.

>> Read also: Your simplified energy bill from 1 January 2022

CPAS assistance via the Gas-Electricity Fund

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:

• Remedial assistance: negotiation of settlement plans with your suppliers or payment of bills;
• Preventive assistance: purchase of appliances (LEDs, class A+++ household appliances, intervention to bring an energy appliance up to standard (maintenance for your boiler, for example), intervention for works designed to reduce your energy consumption (insulation, double glazing, etc.).

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.

End of federal contributions on bills

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.

>> Read also: The essential guide for understanding your energy bill!

Variable contract: annual fee billed in proportion to the number of days of supply

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:

1. An annual fixed amount is billed for every contract year commenced, which means that if you terminate your current contract you will be required to pay the fee in full;
2. A pro rata amount is billed according to the number of months of supply;
3. A pro rata amount is billed according to the number of days of supply, from the first day of your supply contract.

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.

>> Fixed prices or prices? Which should you choose for your energy contract?

The consumer is free to choose the amount of their monthly instalments

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.

The end of automatic renewal of dormant contracts

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.