ACM: energy market is unstable but there are currently no urgent bankruptcy risks
The Netherlands Authority for Consumers and Markets (ACM) has held discussions with energy suppliers, and has asked them to submit additional financial information in order for ACM to be able to check whether businesses are able to meet the requirements regarding security of supply, also after the most recent winter period. An analysis of the submitted information has revealed that, at this point, energy suppliers are not facing any bankruptcy risks. Energy suppliers themselves do not see any urgent risks either. However, the suppliers do point out the risk of a domino effect if another supplier (small or large) were to run into trouble or if Russian natural gas were no longer supplied as a result of the Russian Federation’s invasion of Ukraine.
Since the energy market is expected to remain unstable for the foreseeable future, financial problems can never be ruled out. That is why ACM will keep on conducting checks in order to see whether suppliers that have a license to supply consumers natural gas and/or electricity continue to meet the requirements regarding security of supply. With these checks, ACM cannot prevent any bankruptcies in the energy sector but it seeks to identify risks and problems early, and to confront energy suppliers if necessary. Furthermore, ACM on October 1, 2022, wishes to impose additional requirements on suppliers in order to increase their resilience to sudden wholesale price increases on the energy market with an eye to the upcoming heating season. The Dutch Ministry of Economic Affairs and Climate Policy (EZK) has announced measures guaranteeing the availability of sufficient natural gas for the coming winter period, for example by filling natural-gas storage facilities as much as possible, among other measures.
ACM sees that it is more expensive and, consequently, more difficult for suppliers to fix their wholesale prices for a longer period of time because the prices on the energy market are very volatile at the moment. Fixing wholesale prices for a longer period of time can also be risky if energy prices were to drop significantly. If prices go down, customers will be more likely to switch because they can pay lower rates at other suppliers. The excess energy that suppliers have purchased must then be sold at a lower price. That is why suppliers more and more often choose to fix wholesale prices for shorter periods of time, and only to offer new energy contracts where the tariffs can be adjusted during the contract period. Some suppliers do not even accept any new customers (or only a few). For example, they choose not to be visible anymore on price-comparison sites.
Duty to supply
However, consumers must always be able to take out an energy contract. That is why energy suppliers must always offer consumers the so-called ‘model contract’. In this model contract, all suppliers offer the same conditions so that consumers can easily compare them. It is a permanent contract with variable rates. The model contract is not necessarily the most economical contract that suppliers offer.
Suppliers must ensure that the rates for the model contract can be found on their websites. This applies to the rates for supplying natural gas and electricity, and to the feed-in rate (which is the rate that consumers receive if more energy is produced, for example with solar panels, than consumed, and that surplus energy is fed into the grid). It is not mandatory to offer an online option of taking out contracts, but, in any case, consumers must be able to take out a contract over the phone. Suppliers therefore cannot say, for example, that model contracts are temporarily ‘sold out’.
Since ACM regularly receives questions and complaints through its consumer information portal ACM ConsuWijzer regarding these model energy contracts, ACM sent energy suppliers a letter, reminding them of the rules regarding the model contract. Consumers that face difficulties taking out a model contract or are unable to find the rates thereof on a supplier’s website are invited to report this to ACM ConsuWijzer. ACM will then confront the company in question of these reports, and, if necessary, will take enforcement action.
In addition, ACM calls on consumers always to take a critical look at any offers of energy suppliers regarding a new contract or rate changes. On ACM ConsuWijzer’s website, consumers can find tips on choosing a new energy supplier.