NMa study into Dutch energy markets: Dutch consumers can reduce their energy bill |
Dutch consumers say they still face too many obstacles when considering switching between energy suppliers. Most consumers believe that the costs and potential downsides of active participation in the energy market outweigh the potential benefits thereof. However, consumers that have indeed become active are paying substantially less on their energy bills than passive consumers. Savings can be as high as several hundreds of Euros a year, according to an NMa study into the Dutch energy markets. Furthermore, consumers would save even more on their energy bill if the wholesale markets for electricity and natural gas functioned better. On the wholesale market for natural gas in particular, there is still not enough competition, and the lack thereof is reflected in current consumer prices.
Switching
In 2008, nine per cent of Dutch households switched to another energy supplier, which is three times higher than three years before. Since the small-scale user market was liberalized in 2004, 28 per cent of all households have switched between suppliers, which is roughly a quarter of all households. Furthermore, an additional six per cent is expected to switch as well, and another 23 per cent indicate that they are not averse to switching.
Potential savings can be significant
The gap between the highest and lowest price for natural-gas annual contracts for households, for example, can be as wide as €150, and for electricity annual contracts as wide as €85. For variable contracts, these numbers are €60 and €70 for natural gas and electricity respectively. For three-year contracts, the numbers are even higher: €180 and €140 for natural gas and electricity respectively - which amount to a combined potential savings total of €320.
Hassle
According to the annually held NMa consumer survey, it appears that consumers often have too pessimistic an idea of the potential benefits of switching, which consumers repeatedly tend to underestimate, compared to the actual benefits. In addition, consumers also believe that switching would lead to a lot of hassles, potentially resulting in administrative problems or even in getting cut off from electricity and natural gas. These fears are unjustified.
Transparency
The NMa believes that consumers would have more faith in the energy market and would have a clearer picture of potential benefits, if only they were better informed. Increased transparency would lead to consumers having a better picture of the possibilities and how easy it is to switch, as well as of the potential benefits that switching offers. The NMa will start informing consumers actively, for example through the consumer information website www.consuwijzer.nl. In addition, the NMa will continue to monitor the degree of objectivity of price-comparison websites, and it will also continue to actively monitor customer-recruitment activities.
Obstacles on the natural-gas market
The consumer market for natural gas is hindered by insufficiently functioning wholesale markets. It is assumed that, if the wholesale markets for natural gas and electricity functioned better, household energy bills can be reduced. When buying natural gas, most energy suppliers have no one else to turn to on the natural-gas market except Gasterra (and with Gasterra’s conditions). This means there are still not enough opportunities for competition to flourish between suppliers. New entrants in particular have a hard time acquiring a market share.
Natural-gas storage facilities
One of the most important reasons is that market participants have limited access to natural-gas storage facilities. These facilities are used to accommodate fluctuating demand for natural gas, for example, the differences in natural-gas demand levels between summer and winter. Most of the existing bigger storage facilities in the Netherlands are mainly used by one party: Gasterra. In addition, Gasterra operates the Groningen-gas field. It is therefore almost impossible for market participants to avoid Gasterra. The NMa will be investigating to what degree access to existing natural-gas storage facilities should be increased for other market participants.
Electricity market
The electricity market is not functioning optimally yet either. Utilization of cross-border connections to Germany, but also those to Norway need to be improved. In addition, it is vital for grid operator Tennet to connect new electricity plants to the grid on time. Expanding generating capacity and coupling with neighboring countries will increase competition on the electricity market, which will ultimately benefit consumers.
Note to the editor: For more information, please contact the NMa press officer Ms. Barbara van der Rest-Roest at +31 70 3303362 or +31 622793063 (outside office hours)
or Ms. Pauline Gras at +31 70 3305068 or +31 654715245 (outside office hours).
Alternatively, you can send an email to the NMa press office at pers@nmanet.nl.
Business queries can be submitted to the NMa Information Line by phone at +31 70 3301306 or by email at info@nmanet.nl. If you require consumer advice, please contact the Dutch consumer helpline ConsuWijzer at +31 88 0707070 or visit www.consuwijzer.nl (in Dutch).
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