The energy supplier Eneco stops offering fixed contracts. Because of the soaring price of gas and electricity, the Dutch company explains that this type of contract is no longer financially sustainable for it. But these fixed contracts protect consumers in the event of price spikes. Is this the beginning of the end of fixed contracts in Belgium?
Eneco, third energy supplier in Flanders and fourth in Wallonia, has decided to end its offer of fixed contracts since January 1. The Belgian branch of the Dutch supplier has “made this decision because market conditions are too bad for us and consumers“, according to Mark Van Hamme, spokesperson for Eneco Belgium. He suggests that maintaining this type of fixed contract offer was no longer sustainable in the current context of soaring energy prices.
“A real sword of Damocles above the heads of suppliers”
In total, Eneco is responsible for the provision of nearly 900,000 connections across the country. The spokesperson also clarified that holders of a current fixed contract would not see their contract terminated. It will simply not be possible to renew it once it expires.
According to Febeg, the federation of the sector, this decision by Eneco is anything but a surprise in these particular times. “These fixed contracts have become a veritable sword of Damocles over the heads of suppliers as they must ensure the supply of energy at the same price throughout the duration of the contract, without the possibility of terminating it. In the current circumstances, this contractual imbalance no longer benefits anyone, and certainly not consumers.“, he continues.
This Eneco decision could also be generalized to other market players in Belgium. “This is not the first supplier to stop offering fixed contracts. Why? Because we are currently experiencing extremely high prices. This is putting some suppliers under pressure. Some have even gone bankrupt,” explains Julie Frère, spokesperson for Test-Achats.
“Suppliers prefer to offer variable contracts”
In recent months, three energy suppliers have withdrawn from the Belgian market. “In the current market circumstances, it is difficult for suppliers to offer fixed contracts competitively because they have to source from long-term markets”, explains Stéphane Bocqué, spokesperson for the Belgian federation of electricity and gas companies.
Fixed at any time by customers, fixed contracts are less and less popular with suppliers. “In this context, suppliers prefer to offer variable contracts which allow them to better adapt to market prices”, points out Julie Frère. These prices are constantly increasing. In December, gas prices doubled on the wholesale markets. “All this context really creates a problematic situation for households which experience on the one hand very high prices and on the other hand a lack of competition”, underlines the spokesperson for Test-Achats.
According to the gas and electricity regulatory commission, 65% of consumers have a fixed price contract.