From the cost and the different contracts to solar panels and more, matters related to energy concern everyone. And oftentimes, they can be confusing. To shine a light on the complexities, consumer protection organisation Testachats will every month deep dive into a topic affecting customers. This month, the focus is on energy bills, and how to read them.
Understanding gas and electricity bills is key to understanding how much customers are paying for their energy usage, and whether they could benefit from switching providers. However, the technical terms used in these letters can be difficult to understand and inhibit people from exploring the matter further. This is where an explainer can be useful.
"Firstly, it is important to clarify the difference between a fixed and a variable contract," Testachats spokesperson Laura Clays told The Brussels Times. Before choosing a contract, it is best to decide for yourself how much price risk you are willing to take.
- A fixed energy contract has a fixed energy component which does not change. This means customers pay the same for the entire contract term (usually one year), and market fluctuations during this period have no effect on the bill. When energy prices are rising, people are better off with a fixed contract.
- A variable energy contract has a variable energy component which decreases or increases with the prices of the energy exchanges. This means that, at different times of the year, the energy price paid is based on the market prices at that moment. When energy prices are falling, people benefit from this type of contract, but if prices skyrocket, they will pay much more.
In February, 30% of Belgian households had a fixed contract, down from about 70% before the 2022 energy crisis. "Most households prefer a fixed contract as it offers security: not only the consumer is committed, but also the supplier," she explained. However, fixed contracts are a lot more expensive than variable contracts at the moment.
"It is the price you pay for the certainty that it will never get more expensive," Clays said. "But the difference is still so high that many do not choose a fixed contract. In February, the difference (for gas and electricity combined, and for average consumption) was €290." Testachats every month lists the best energy deals per region here.
Understanding your bills
Energy bills in Belgium contain four major components: energy, network costs, levies and VAT. However, the share of these various components depends on what region a customer lives in.
In Brussels, for example, the energy component for electricity is 42%, levies count for 29%, the network costs equate to 23% and the VAT is 6%. For gas, this is 66% for energy, 13% for levies, network costs account for 15% and VAT for 6%.
In Flanders, energy accounts for 41% of electricity bills, followed by levies (27%), network charges (26%) and VAT (6%). For gas, this is 65%, 12%, 17% and 6%. In Wallonia, 40% of the bill is energy costs, 29% network charges, 25% levies and 6% VAT for electricity. For gas in the region, bills consist of 57% energy, 21% network costs, 16% levies and 6% VAT.
Energy
This relates to the price per kilowatt hour (kWh) set by the suppliers and the only component for which competition is possible. As mentioned above, depending on the type of contract, the price of the energy component is fixed or variable.
In the case of a fixed price, the energy price communicated when signing the contract is fixed for the entire duration of the contract. In the case of a variable price, the energy price is periodically adjusted based on the fluctuations of energy prices in the energy markets.
By comparing the unit price per kWh on your invoice with the energy price that was valid on the day you signed your supply contract, subject to indexation, customers can check whether their supplier has invoiced them the correct price for the energy component.
Network costs
This component consists of the distribution network tariff and the transport network tariff applied by the distribution network operator (for example Sibelga in Brussels). Find the various costs that apply in Brussels here, in Flanders here and in Wallonia here.
Levies
Levies are the taxes imposed by the government, specifically: the energy contribution, excise duties on electricity and natural gas, the costs for green energy and cogeneration, payment for use of public domain and the tariff for public service obligations imposed on the distribution network operator, among others.
Some levies are regional: the fee for connection to the electricity network and the gas network is only applicable in Wallonia, while people in Flanders are charged an energy fund contribution. In Brussels, a surcharge for public service obligations is imposed on suppliers.
The levies that are passed on by the network operators can be found on the websites of the regional regulators (same as above).
VAT
- For electricity, the 6% VAT is applied to all components, except for the connection fee in the Walloon Region and the levy to finance the Energy Fund in Flanders.
- For natural gas, the 6% VAT is applied to all components, except for the subsidised customers surcharge and the Walloon connection fee.
Space to simplify
The Belgian energy watchdog (Commission for Electricity and Gas Regulation or CREG) has stressed that Belgian suppliers have committed to making their invoices clear, legible and comprehensible. However, Testachats argues that more work is needed.
"Anyone who has ever taken a proper look at their energy bill will likely feel that they don't understand how much they are paying for what, or whether it has been calculated correctly," Clays said.
For this reason, the organisation has called for two improvements. "Firstly, we want fewer taxes and levies on the electricity bill," Clays said. "These make it complicated and, above all, expensive, which is rather contradictory in an era in which we want to encourage people to drive electric cars and heat their homes with electric heat pumps instead of gas."
This is also a demand from the umbrella organisation of electricity and gas suppliers (FEBEG), which together with Testachats asked for this to be included in the coalition agreement. "As far as we can see from the coalition agreement, the modalities of such a tax shift will be investigated," Clays said.
Secondly, the organisation calls for rates, especially on variable contracts, to be made much clearer. "Currently, a variable rate follows a certain market, but no consumer knows which market their contract follows. Let alone where they can follow the evolution of that market, and what influence that has on the price they are charged." She noted that this could be made clearer by reducing the number of parameters that make up the variable rate.
