Dutch consumer energy market is improving, but NMa is not yet satisfied

The Dutch consumer energy market is functioning more smoothly. Energy companies have stepped up their performances, and consumer confidence in their own energy company continues to increase. More consumers are also switching to different energy suppliers, partly because consumers actually have a real choice nowadays. Consumers could save more than €200 by switching between energy suppliers. At the same time, the Netherlands Competition Authority (NMa) sees that consumers are still having trouble with comparing energy companies or their offers. Consumers also put little confidence in the objectivity of the comparison information that is available. This has been one of the reasons that the NMa has tightened the guidelines on the publication of consumer information, and it will monitor compliance with those stricter guidelines in 2009. These are the results of the Monitor of the Dutch Electricity and Natural Gas Markets for Small-scale Users (July 2007 – July 2008), which the NMa published today.

The results also reveal that the number of consumers that consider switching in the next two years is decreasing. Waning enthusiasm among consumers to switch can be explained in part by the intensive customer-recruitment activities conducted by several suppliers. The consumer-information site ConsuWijzer, jointly operated by NMa, the Dutch Consumer Authority and the Independent Regulator of Post and Electronic Communications in the Netherlands (OPTA), reports it has been receiving more complaints about such activities. Negative publicity in both the media and in several debates in Dutch Parliament has also contributed to the bad reputation of customer recruitment. Therefore, the NMa will examine in 2009 whether customer-recruitment activities in the energy market comply with Dutch regulations, and it will take action if and where necessary.


Switching to a different supplier can prove beneficial. Those with an electricity and natural gas contract for an indefinite period of time could have saved up to €75 per year during the investigated time period if they had switched from the most expensive supplier to the cheapest. Those with a fixed-price contract for one year could have saved up to €220 per year by switching. These figures have not even taken into account the fact that some suppliers also offer customers one-off discounts if they switch. Switching can therefore prove even more beneficial. In the Netherlands, eight per cent of all consumers have switched to a different supplier between July 2007 and July 2008. In the UK, this percentage is significantly higher: more than 20 per cent of UK consumers regularly choose a different energy supplier. Most other EU countries have switching rates of one or two per cent, while Belgium has a switching rate of more than 6 per cent. The effect of switching is not entirely lost on the three major energy suppliers (Essent, Eneco and Nuon), as they saw their joint market share of 80 per cent slightly decrease. The energy market is nonetheless still considered a highly concentrated market.


The monitor reveals that consumers give the administrative services of the energy companies higher marks than in the year before, and that the marks for handling complaints have on average increased, compared with last year, although the industry average is still unsatisfactory. Another finding is that consumer confidence in their own energy company has increased even further than in the previous research period. On the other hand, consumers have less confidence that the functioning of the energy market will have positive effects in the long run. This is in contrast with the previous monitor, in which the NMa had found a slight increase in that confidence.


The decrease in consumer confidence in the energy market as a whole might be explained by the decrease in consumer confidence in the economy in general, by higher energy prices, and by the negative publicity that the customer-recruiting activities in the energy market attracted in recent months.


The consumer energy market has already seen a lot of changes in recent years, and will continue to see other changes in the next few years: a capacity tariff has been introduced (connection size determines the level of the transmission tariff), a so-called 'uniform suppliers' model' will be introduced, integrated energy companies will be unbundled, and so-called 'smart meters' will be introduced. In the long run, these changes will improve the functioning of the consumer energy market. However, a smooth transition to the new situation calls for a great deal of attention from all involved. The NMa's focus is on introducing all of these changes in a controlled manner without any hiccups.