Gas and electricity prices have been falling for weeks. Households with an energy contract in which the rate changes daily benefit in particular. Consumers flock to providers of such ‘dynamic’ contracts. However, they are hardly to be found at price comparison sites, as politicians call them risky. “Because our growth is going very fast, we are scaring the big energy companies.”
Thanks to the price cap as of 1 January, the government will compensate customers for a maximum consumption of 2900 kilowatt hours at €0.40 per kilowatt hour. For gas, the limit is €1.45 for the first 1200 cubic meters of gas. If you use more, you pay at the market price.
But prices are lower on the wholesale exchange. From last August’s peak for gas at €350 per megawatt hour to below €50 for the same amount of gas on Wednesday. The reason: the large energy companies purchased electricity and gas for a longer period of time, sometimes years in advance, and have to pass on those old high prices. But more and more providers are showing off lower current daily rates: Frank Energie, Tibber, EasyEnergy, EnergyZero and Nieuwe Stroom use prices on the ‘spot market’.
Such daily prices provide more up-to-date, dynamic prices. Consumers are offered them daily for gas and hourly for electricity. Currently with a clear price advantage: doing laundry last Sunday cost €0.06 per kilowatt hour at the cheapest time. Although VAT and energy tax must still be added.
ANWB rides along
The ANWB has been offering such contracts for a year and a half. Over the past seven years, the interest group substantiates, the dynamic electricity rate was about 85% of the time below the average fixed rate charged by the major energy companies, the representative says. “Dynamic contracts are really the talk of the day with our members,” said the spokesperson.
“Customers can immediately see what they are paying in their app. Although you can leave us every day, we are growing quickly,” says founder Thomas Hulshof of Frank Energie with over 50,000 customers, which is expanding to Belgium and Spain.
The real growth started in August last year. Ferwerda: “The gas price went through the roof, suddenly energy companies no longer offered permanent contracts. Still variable, but they were very expensive. Consumers then saw that rates at our companies were much lower despite that peak. Since then, the growth has continued to around 400,000 customers this year.”
The risks of such dynamic contracts are great if the price remains high for a long time, the Consumers’ Association previously warned. In the weeks around the price peak of August last year, households that bought electricity on a daily basis ran out of money. Providers who had no reserves in electricity and gas could not meet these purchase prices on the stock exchange and collapsed.
Responding to valley
According to director Auke Ferwerda of the trade association of suppliers VVDE, this disadvantage is ‘minimal’ compared to the advantages: more up-to-date insight into prices at lower average costs. By connecting the car to the plug or switching on the heat pump at times of low prices and therefore a lot of supply, such contracts help to limit the enormous congestion on the road, says Ferwerda.
Those who have such a dynamic energy contract on a daily basis remained below the price ceiling in January. And again in February: households paid €0.322 per kilowatt of electricity last month, which remains €0.08 below the ceiling. Gas cost an average of €1.281 per cubic meter, and remained €0.17 below this price ceiling. “In doing so, they saved the taxpayer a lot of money,” says Frank Breukelman of Zonneplan.
“It now looks like dynamic contracts for electricity will also remain below the price ceiling for most of the year,” says Rens Schoorl, director of Tibber Netherlands.
Not all costs will fall, comparator Gaslicht.com nuances: the so-called standing charges and the variable surcharge per cubic meter and kilowatt hour will also be added for providers of dynamic contracts and differ per supplier. Just like energy tax, VAT and network management costs such as a fixed and variable energy contract.
Cheap laundry
For dynamic contracts, households do need a smart meter that continuously transmits readings. According to Netbeheer Nederland, seven million households now have such a meter. “We see what the market prices are tomorrow, and when it is cheap and expensive. You can see that difference ahead in your app: you can see when you can do the laundry cheaply,” says Schoorl.
ConsuWijzer of the regulator ACM also states that such a dynamic rate can be ‘attractive’. “For example, you can charge your electric car cheaply when the rate is low for a few hours.” And earn money if the energy price is just as negative if more energy is generated than consumed, as it turned out on April 23 last year when the lowest electricity price ever (-€ 0.20 per kilowatt hour) was reached. But the price can also exceed the fixed rate, warns ConsuWijzer. Electricity cost an average of €0.87 last year.
“The energy bill could be even lower. More than half of your bill consists of taxes, with VAT on energy rising from 9 to 21%. The government even keeps the dynamic energy price high,” says Frank Breukelman of provider Zonneplan.
Cheaper at night
For users, the app that continuously displays consumption has sometimes almost become a game. “You can immediately see what you use on your app. Especially with those high prices you want to stay below that,” says Schoorl van Tibber, with more than 400,000 customers in Europe. “That it is much cheaper to do that laundry tonight, for example. We want to reinforce this behavioral change in consumption, in order to save money and accelerate the energy transition.”
The falling prices also help variable rate customers. Budget Energie (800,000 customers) this week joined suppliers such as Eneco (2 million customers) who have started offering a price below the price ceiling.
The industry association VVDE claims that households with a dynamic energy contract were on average 35% cheaper last year for electricity and 25% less for their gas, compared to households that had a variable contract in the most expensive year ever. That made the most difference in October and November, with €110 and €81 savings respectively, but August was more expensive. “In nine months out of twelve, households with a dynamic gas contract were cheaper than if they had taken out a variable contract,” says chairman Ferwerda, also director of EnergyZero.
‘They avoid us’
With the major comparators, however, you have to look for the dynamic contracts. “They avoid us,” says CEO Van der Woude of Frank Energie. “But we have our own channels to consumers, we grow well that way.” That could change if the Energy Act of Minister Jetten (Climate and Energy) is adopted, which obliges energy companies to offer dynamic contracts if customers request this.
The comparator Pricewise says that it will make the dynamic contracts comparable on the site in a separate block ‘sometime this year’. “It is an exciting new opportunity for consumers. But I would never compare them with variable and fixed contracts; prices are different every day for every household, this applies to all 365 days in a year and the payment method also differs per month,” explains director Hans de Kok. Competitor Independer expects to add them ‘soon’. “Especially the rate, the netting with solar panels and price ceiling are more complex to arrange and to compare with variable and permanent contracts,” says expert Joris Kerkhof.
Gaslicht.com will also soon come up with a separate comparison, says director Ben Woldring. “These are products with a decent package insert. Geopolitical developments literally enter your living room without delay. Consumers must therefore be well aware of the risks they run and be able to absorb them financially,” he says.