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Energy suppliers must make energy prices clearer

Energy prices are difficult to understand. That is the conclusion of the Netherlands Authority for Consumers and Markets (ACM) in a study among consumers. A mere 13 percent of consumers is able to see the relationship between their energy supplier’s offer, their contract, and the information on their bill. This hinders consumers trying to make well-informed decisions. Furthermore, it causes many consumers who want to switch energy suppliers to abandon those switching plans. Anita Vegter, Member of the Board of ACM, comments: ‘We are calling on the industry to use clear information about prices. As long as consumers are unable to understand their bills, it is necessary to continue ACM’s oversight on energy prices. The ball is in the energy industry’s court now.’

Study results

ACM in early April already found that consumers that think about switching abandon those plans because of the unclear information given by energy suppliers. ACM´s current study reveals that 87 percent of consumers find that the price information given by the different suppliers is difficult to compare. This is a problem because consumers are thus less aware of the price differences between energy suppliers, and are therefore less able to select the best offer.

Recommendations to the industry

Based on this study´s results, ACM is calling on the energy suppliers to:

  • Use uniform terms, and to explain these clearly;
  • Reduce the number of price components;
  • Give consumers customized offers and contracts;
  • Include taxes and VAT in all advertised offers;
  • Switch from the high tariff to the low tariff simultaneously in all regions.

The energy suppliers agreed to come up with concrete proposals in early July on how to make energy prices clearer with regard to these aspects. ACM will assess whether the proposals enable consumers to make a good choice based on information that is easy to understand and  easy to compare. Thus far, ACM oversees whether prices that energy suppliers charge consumers are reasonable. If energy prices are easy to understand and easy to compare, consumers will be better able to make a choice on their own. This will lead to increased competition and to a downward pressure on prices. As long as this is not the case, ACM’s regulation of energy prices will remain necessary.

Recommendations to consumers

Since many consumers have difficulty with understanding their energy bills and with comparing the offers of different suppliers, consumer information portal ConsuWijzer provides information on how to do just that. In addition, ConsuWijzer has also developed a step-by-step guide on how to switch energy suppliers, which can be a useful tool for consumers that are considering switching suppliers.