Energy prices in the Netherlands are finally declining, and savvy, money-saving Dutchies are looking for the best deals out there before their current energy contracts end.
While sticking to the same energy provider and contract sounds comfortable (and hassle-free), changing your contract and provider might actually save you a euro or two.
However, before you select an energy contract, we first need to talk about the new energy contract law in the Netherlands.
What is the new energy contract law?
So what’s all the fuss about energy contracts in 2023? As of June 1 2023, energy providers can now fine customers for quite a sum for cancelling a contract before it’s finished or as it’s just expiring.
To compensate energy suppliers for the loss they incur when consumers terminate their contracts early, they are now able to charge a termination fee that corresponds with this loss.
It’s a tad bit complicated as there’s no fixed amount for this termination fee.
Instead, the contract termination fine will be equal to how much money the supplier loses from the early cancellation of your contract. This depends on:
- The amount of energy you would still consume under the old contract, and
- The price difference between the old rate of your current contract and supplier, and the new rate for the same contract
For more on all this, check out this handy blog from our friends at Partner Pete.
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How you can save money?
The amount of the switch penalty under the new energy contract law will be significantly higher than what everyone was accustomed to in the old situation. Where the previous penalty fee was fixed at €125 per product, it may now often be more than double that. Ouch!
However, it might still be more beneficial to pay the fine than staying with your current contract and avoiding the fine.
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With the slowly decreasing energy costs, you could still be paying more for a contract based on older energy rates, compared to switching to a provider using newer (and cheaper!) energy rates.
For example, Vattenfall will soon offer an extended fixed energy contract of three years to help customers save costs and give them a sense of stability.
PartnerPete has plenty of contract coaches who can make sure you find the perfect energy contract, all while saving money! Get in touch with them to arrange your utilities hassle-free.
Ok, so you’ve decided to take the leap and switch to a new energy contract, good for you. Do you know what type of contract is best? Let’s walk you through your options.
Fixed-rate vs. variable contracts: what’s the difference?
The two main types of contracts are fixed-rate and variable contracts. Uhh, what?
A fixed-rate contract means you pay a fixed price per kilowatt hour (kWh) of electricity and meter-cubed (m3) of gas consumed within a month.
On the other hand, a variable contract means the price you pay for energy changes and is only set for a certain period of time.
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Such a period can last one, three, or six months depending on the arrangement you made with your energy provider. The provider will determine how prices change in a variable contract to suit market demand.
The pros and cons of fixed-rate vs. variable contracts
Both types of contracts have their pros and cons. So your choice really depends on what you value most.
If you’re looking for stability and want to know exactly how much you’re paying for your bill every month, a fixed-rate contract may suit you better.
If you’re looking to save money and willing to take a risk, variable contracts may be best for you. However, they’re a little more tricky.
In a variable contract, your monthly bill depends on the price set by your energy provider for a given period and is usually a little cheaper than in fixed-rate contracts. It’s usually with a pinch of salt though, as it’s yet unclear how the contracts will look after June 1.
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If you don’t mind being a little risky, you can save a lot of money when your provider sets energy prices low, but likewise, you can end up paying a lot if your provider increases the prices for that period.
Short-term vs. long-term contracts: what should I opt for?
Once you’ve chosen a type of contract, it’s time to consider the length of the contract.
Energy contracts are typically considered short-term or long-term. Short-term contracts tend to be six months up to a year, while long-term contracts are at least a year long and can be 3 years or even 5 years.
Short-term contracts are good for flexibility — for example if you want to try out other energy providers or realise you don’t like your current contract.
You can easily change short-term contracts, but in a long-term one, you’re bound to one contract for up to three years.
READ MORE | Switching utility providers in the Netherlands: the ultimate guide
Contract lengths can cost different amounts depending on the contract period. For example, a three-year contract can have a lower monthly average than a one-year contract. This is mostly because energy providers want to keep their customers around and try to give them more beneficial prices.
Lately, however, longer contracts actually cost you more. In this case, you’re paying for certainty and the chance to sleep soundly knowing your rates won’t skyrocket like it’s the winter of 2022.
Not sure where to start when looking for a new energy contract in the Netherlands? PartnerPete offers a handige service that can help customers find the ideal contracts for their situation and make sure they’re getting the best deals available. Even better, you can do it entirely in English!
The energy market doesn’t have to be difficult to navigate with the right information and the right tools. So make sure to consider all the options with an expert, take your time, and you’ll have the best energy contract for your situation.
Do you have any tips for saving money when swapping energy contracts? Share your thoughts in the comments!