ACM: Making well-informed decisions about new energy contracts is hindered by uncertainty about resellers and early-termination fees

It is often difficult for households to make the right choice when taking out new energy contracts. Some of the reasons for that are uncertainty about resellers, authorizations, and early-termination fees. The Netherlands Authority for Consumers and Markets (ACM) recommends consumers never to agree to new energy contracts during unsolicited phone calls, and never to sign (including digitally) for authorizations. If you wish to take out an energy contract through a reseller, only do so if you know on behalf of which supplier that reseller is making an offer as well as what the conditions are.

"For consumers, choosing an energy contract is more than complicated already. It is often not clear to consumers what the amount of the early-termination fee will be, and what supplier they are actually taking out a contract with. Energy contracts are complicated products, which are not suitable for being sold over the phone," says Manon Leijten, Member of the Board of ACM.

Resellers

Many energy suppliers hire ‘resellers’ for the recruitment of customers. Resellers are businesses that sell contracts to consumers and other small-scale users on behalf of energy suppliers. Resellers cannot pretend to be energy suppliers themselves, and it must be clear to customers that they are dealing with resellers. This means that the name of the licensed supplier must be printed clearly on contracts and on the website, and that resellers must be clear about this in all of their communications with customers (including potential ones). ACM investigations have shown that resellers often do not clearly explain for what energy suppliers they work. As a result, customers do not know which licensed supplier they actually have a contract with.

Authorizations

Some resellers contact customers directly on behalf of a specific supplier, while other resellers work with authorizations. In that case, consumers are, for example, asked over the phone to sign authorizations. With such authorizations, resellers are able to take out energy contracts on behalf of those consumers with licensed energy suppliers without any further consultation. As a result, a consumer, when signing an authorization, may not know from which licensed energy supplier they will get a contract. In addition, consumers can be transferred to a different supplier after signing the authorizations. Consumers that have signed authorizations can revoke these at any time. After such revocations, consumers can decide for themselves again with which energy supplier they wish to take out a contract.

Uncertainty regarding early-termination fees

ACM conducted an investigation into the early-termination fees that customers with fixed contracts must pay if they wish to cancel their contracts before the end of the fixed term. This investigation revealed that it is often not clear to consumers how their energy suppliers calculate the early-termination fees. Consumers are therefore unable to properly check these early-termination fees, and are thus unable to make a well-informed decision about terminating their contracts early. The investigation also reveals that, during sales calls involving energy contracts, consumers are often given incorrect information about early-termination fees. For example, businesses that wish to sell new contracts fail to warn customers that they may have to pay an early-termination fee. On the other hand, there are also suppliers that wish to retain their customers, and therefore threaten with high early-termination fees or give incorrect information.

Energy suppliers must give customers correct information in a timely manner about the amount of the early-termination fee if they wish to switch by terminating a fixed contract early. Over the next few months, ACM will continue with its investigation into early-termination fees, and will take measures if it turns out that energy suppliers do not comply with the rules. In addition, ACM has reminded energy suppliers of their responsibility for ensuring that it is clear to customers what energy supplier they have taken out a contract with. ACM sees to it that energy suppliers do so.

• Early-termination fees for energy contracts | ACM.nl (in Dutch)
• Resale of electricity and natural gas | ACM.nl (in Dutch)