They are back from a (temporary) absence: energy contracts whose price is fixed for a long time. Due to the energy crisis, these were hardly available last year, but now that gas prices are falling somewhat, that is slowly starting to change.
For the time being, suppliers only offer them on a small scale, but there will probably be more supply in the coming months. That could be beneficial for many people, experts say.
Energy crisis
The Russian invasion of Ukraine sent the energy market into crisis: Russia dropped out as a major gas supplier, causing prices to rise rapidly. This made it impossible for suppliers to offer permanent contracts. Because the rates they would charge for this would soon be too low again.
People who wanted to conclude a new energy contract therefore had to rely on variable contracts whose price is adjusted several times a year. Prices skyrocketed for many households last year. The cabinet came up with a price ceiling to help them.
But now that the purchase prices of gas are falling, suppliers are once again daring to offer permanent contracts. “For example, there are already a number of offers of contracts with a price that is fixed for one year,” says Hans de Kok of price comparison site Pricewise.
The prices of energy contracts are also falling at the moment. “We expect the rates to fall below the level of the price cap,” says De Kok. For anyone with a variable contract, this can quickly result in a lower energy bill.
Whether switching to a permanent contract is beneficial depends on many factors. For example, a fixed energy contract (with a term of one year) is not yet available to everyone. They are only available from the small suppliers Mega, Innova and HEM. But, says De Kok, “they only buy a limited amount of gas, so that means they can’t offer such a contract to everyone by a long shot. The rule is: gone is gone”.
Essent and Vandebron also recently started offering permanent contracts again, but only to some of their own customers, the companies said. News hour. De Kok: “The energy market is still turbulent, so they only sell fixed contracts very specifically to a specific group.”
If you belong to that select group, it can “certainly be interesting” to opt for that fixed price with a relatively low rate, says De Kok. “The price ceiling only applies to this calendar year, 2023. If you choose a fixed price for one year now, you will also have a fixed price afterwards.”
Higher transfer fine
Suppliers are still cautious with permanent contracts because the market is “not yet very stable”, says energy economist Hans van Cleef. “Because the gas stocks are well filled, prices are a lot lower than last summer. But the uncertainty in the market is still very high.”
Whether Europe can keep its gas supplies full depends largely on China, says Van Cleef. “Last year we were able to buy a lot of LNG, liquefied gas, which was actually destined for China. Because China was in a lockdown and the economy was not running smoothly. But now that the economy is starting up again, there is automatically less LNG available for Europe Then shortages can arise, which in turn pushes up prices.”
However, it is expected that the Dutch will be able to choose more permanent contracts in the coming months. The reason: customers will soon have to pay a higher fine if they want to end their permanent contract prematurely, which means extra money for suppliers. Eneco, Vattenfall, Oxxio and WoonEnergie say against News hour to offer permanent contracts again when that arrangement is complete.
Now you can often get out of a permanent contract for about 50 euros per product (gas and electricity). The new rules should prevent all customers from switching to a cheaper contract in the event of sudden price drops. The energy company will then be left with expensively purchased energy and could even collapse. De Kok advises people to consider switching “while the termination fees for fixed-price contracts are still relatively low”.
Chance of lower prices after 2025
Energy economist Van Cleef expects energy prices to remain relatively high in the coming years. “That is mainly because the total supply of gas has decreased because Russia is no longer one of the major players.”
Until 2025 or 2026, “it will remain a very tight market with upside price risks,” he says. “In 2025, some large gas projects will become available, especially in Qatar. Plus, then sustainable energy sources and the current efforts to use energy more efficiently will really get going. There will then be some more air in the market.”
