With gas and electricity rates falling since last year’s peak, consumers are looking for less expensive fixed energy contracts, for a year or more.
Consumers are currently alarmingly often confronted with fraud, warns the Authority for Consumers and Markets (ACM). “Unfortunately, with the energy market getting going, we are seeing an increase in the number of reports of aggressive and misleading recruitment for new energy contracts,” says Edwin van Houten, Consumer Director of ACM.
He does not name the aggressive sellers who deceive. But “we are investigating companies that we receive a lot of complaints about,” he says after a flood of complaints.
Multiple choice
For a long time, households whose energy contract expired almost only had the choice of variable gas and electricity contracts, for a short period of time, with high monthly rates. Now the permanent contracts are returning for one or more years.
Until now, suppliers have made no effort to recruit new customers because of uncertainty about the high price. “Now we see that supply is increasing again and that recruitment is taking place again. We are again seeing a lot of complaints about misleading recruitment, especially misleading phone calls.”
The watchdog calls it good that more different types of energy contracts are available again. This results in competition and price differences, which consumers can benefit from. But shrewd providers abuse that searching consumer, he notes.
“Consumers are called, for example, that their current supplier is on the verge of bankruptcy and that they must switch quickly. While that is not the case at all,” says Van Houten.
The aggressively operating telephone sellers also offer energy contracts that are far from the best financial offer for a household.
‘Aware’
The abuses are so serious that ACM calls on consumers to ‘be alert’. “Don’t just accept an unsolicited offer of a new energy contract. An unsolicited telephone offer is never really the best choice,” says Van Houten. “Do not agree to a new contract during the conversation, first compare the offer with that of other suppliers. You can also disconnect the call.”
Due to the panic about the gas shortage in the Netherlands after the Russian invasion of Ukraine in February last year, energy prices shot up towards the winter. Suppliers had to pay historically unprecedented high purchase prices for their natural gas and generated electricity. They did not dare to offer households permanent energy contracts for a longer period of time.
Until the beginning of this year, with a new contract to be concluded, consumers were at the mercy of offers with mainly variable prices, which also went up and down considerably. As a result, the so-called dynamic energy contracts became popular, where the price can differ per day or per hour.
Higher transfer fine
Many permanent cheap contracts expired last year. Due to the uncertainty in the market and the fixed, relatively low cancellation fee, suppliers did not want to offer new permanent contracts, the watchdog outlines. Consumers who could get cheaper contracts quickly accepted the mandatory switching fine of a few tenners before leaving their existing contract. They made up for that fine within a few months with the improved market prices.
According to the cabinet, that large number of departing customers created too much uncertainty. That old switching fine or ‘cancellation fee’ will therefore increase drastically as of 1 June: consumers pay energy suppliers the full amount that is still outstanding with them for the term of their permanent contract. That remaining amount is often hundreds of euros higher than the switching fine.
“The cancellation fee can be high if the price difference between the old and the new contract is large, and if a consumer would still purchase a lot of energy under his old contract,” warns ACM’s Van Houten. The regulator foresees financial setbacks for households and advises to calculate well in advance whether switching to a new contract is worthwhile. “And whether they can afford the new termination fee,” he says.
Request conditions
“Consumers who want to switch can ask their old supplier about the conditions and the amount of the cancellation fee,” suggests Van Houten, “and then make a decision.”
From 1 June, the providers are obliged to provide this overview of costs on request. Households that switch also have a fourteen-day cooling-off period. “In those days you can still waive the new contract and continue with your old agreement,” said ACM, which says that energy companies will strictly adhere to this.