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ACM and Energie-Nederland make arrangements regarding energy contracts with dynamic prices

The Netherlands Authority for Consumers and Markets (ACM) finds it important that energy suppliers that offer energy contracts with dynamic prices inform consumers properly about how such contracts work and what risks may occur. That is why ACM has made arrangements with Energie-Nederland, the Dutch trade association of energy companies, about the provision of such information. These arrangements have been laid down in Energie-Nederland’s Code of Conduct for Consumers and Energy Suppliers (in Dutch: Gedragscode Consument en Energieleverancier). This code of conduct contains all the rules that energy suppliers and intermediaries need to comply with when selling energy contracts.

Energy contracts with dynamic prices are contracts where the prices of electricity and natural gas are directly linked to the prices of electricity and natural gas on the spot markets (also called the day-ahead market). This means that prices are known one day in advance. The electricity price may vary each hour, whereas the natural-gas price is set each day. The actual consumption of electricity and natural gas is charged afterwards on the basis of the consumption data that the smart meters keep track of.

Since prices are only known one day in advance, and may vary each day or even each hour, it is important that providers of dynamic-price contracts inform consumers clearly about the procedures surrounding these contracts. For example, they need to explain to consumers that energy bills are higher in winter than in summer. Consumers will then be able to decide, on the basis of the information they are given, whether they accept that risk, and whether they are able to pay such bills if prices go up.

Energy suppliers that use fixed prices (for example by fixing prices for one, two, or five years) charge risk premiums on top of the purchase price in order to ensure that they will be able to fulfill such contracts if energy prices go up. With energy contracts with dynamic prices, suppliers incur fewer risks, and consumers will only have to pay the hourly rate (for electricity) and the daily rate (for natural gas). Since consumers are also informed when prices go down, they will be able to adjust their consumption accordingly as much as possible. Providers of dynamic-price contracts often also offer smart solutions that give consumers greater control over their energy consumption.

Personalized offers

All suppliers are required to make consumers that wish to sign energy contracts personalized offers, so that it is clear to consumers what they will pay those suppliers. Personalized offers are also important because they enable consumers to compare the different suppliers. In the supplementary declaration to the code of conduct, Energie-Nederland has laid down that, once a month, suppliers that offer dynamic-price contracts calculate, in accordance with a pre-specified calculation method, the expected purchase price for the next 12 months. Suppliers will then use this expected purchase price when drawing up personalized offers, and consumers will be able to compare dynamic-price contracts of different suppliers on the basis of their own annual consumption.

In order to inform consumers properly with regard to dynamic energy prices, the signatories of the supplementary declaration have launched the website, which contains additional information.

More information