ACM: fixed energy contracts offer the most certainty when price cap is lifted
Consumers that wish to have certainty regarding their energy bills in 2024 are best advised to go for fixed contracts with prices below the current price cap. According to the Monitor on the consumer energy market by the Netherlands Authority for Consumers and Markets (ACM), fixed contracts are currently cheaper than variable contracts. Over the past month, fixed contracts for two or three years have become approximately 5 percent cheaper, and are currently the cheapest.
On 1 January 2024, the price cap will be lifted. Consumers will then once again pay the prices in their energy contracts. This means that, from that date, households will no longer be protected against high energy prices. Households that wish to have certainty regarding their energy bills are therefore best advised to go for fixed contracts with prices below the price cap. Households that find fixed prices less important are able to choose from a wide selection of affordably priced variable and dynamic contracts. Over six percent of Dutch households have energy contracts with prices above the price cap.
With fixed contracts, prices are fixed for the entire length of the contract (usually one, two, or three years). With variable contracts, suppliers are able to adjust prices, for example if prices on the energy market go up. This happens twice a year for most variable contracts, on January 1 and July 1. Suppliers must always announce price changes of their variable contracts at least 30 days in advance. With dynamic contracts, prices can vary each day or even every hour. Consumers with dynamic contracts are usually able to see (in an app or on the website) one day in advance what prices they need to pay the next day. Among all households, 42 percent have energy contracts with fixed rates, 55 percent have contracts with variable rates, and three percent of households have dynamic contracts.
Transport costs and taxes
From January 1, 2024, households need to pay more for the transport of natural gas and electricity to their homes. In addition, taxes on electricity go down, while taxes on natural gas go up. As a result, households spend, on average, 10 euros per month more on transport costs and taxes.
Early-termination fees when cancelling fixed contracts
Consumers that took out fixed contracts before June 1, 2023, will usually have to pay an early-termination fee of 100 euros if they terminate their contracts early. The new rules regarding early-termination fees apply to all fixed contracts that have been taken out after that date. With regard to those contracts, consumers must cover the losses that suppliers incur as a result of early termination. Suppliers are left with the energy that they purchased at higher rates but which users had promised to consume. Consumers that wish to switch can ask their current suppliers about the conditions and the amount of the early-termination fee, and then make a decision afterwards. Consumers can always cancel variable or dynamic contracts for free.
Smaller selection for households with solar panels
The Monitor on the consumer energy market also reveals that, with regard to electricity, ten suppliers do not offer any fixed contracts for two or three years to households with solar panels. In addition, four other suppliers have made contracts for these households less appealing. Suppliers have done so because they incur higher costs for the electricity that is generated by solar panels and is fed back into the grid. However, it is possible to take out fixed contracts with longer lengths with seven suppliers, even if you have solar panels.
Suppliers are not required to offer fixed contracts, and current legislation does not prohibit distinguishing between customers that do or do not have solar panels. Suppliers are bound by a duty to supply. This means that suppliers must always offer customers at least the so-called ‘model contract’. This is a standard contract with variable rates.
More information
Monitor on the consumer energy market (in Dutch)