You are currently viewing 6% VAT, extended social tariff, contracts…: here are the CREG’s recommendations to help Belgians face the energy crisis

6% VAT, extended social tariff, contracts…: here are the CREG’s recommendations to help Belgians face the energy crisis

  • Post category:Economy News
  • Reading time:3 mins read

The Electricity and Gas Regulatory Commission (CREG) presented a series of recommendations to the Chamber on Tuesday on the eve of a government meeting which will once again address the measures to be taken to help households and businesses cope to the energy crisis.

At the national level, the gendarme of the sector proposes for example to extend the granting of the social tariff as long as the prices have not come down to an acceptable level, as well as the reductions in VAT. He also warns political leaders about a phenomenon: if prices remain at a very high level for several years, social tariffs will increase in such a way that they will approach commercial tariffs (whereas they allow beneficiaries to pay 52% less for their electricity). The CREG therefore recommends thinking now about the method of calculating the said tariff. Another recommendation, expected and on which the government has been working for several weeks: better protection of households around the median tariff, whether by an extension of the social tariff or an “intermediate formula”. Households above this level can protect their purchasing power by indexing their wages. The CREG is also targeting the Regions: by investing in the insulation of the homes of protected customers, nearly 15% of their bills could be saved, which would generate savings of 350 million euros for the State. The CREG observes that Belgium has little regulation of the sector in terms of prices, unlike its neighbours, who are much more interventionist. “Wholesale prices are quickly and completely passed on to the bills of SMEs and households, unlike neighboring countries which have a form of regulation”, explained the director, Laurent Jacquet.

The institution’s report therefore insists on the interest of imposing regulated offers on suppliers over time, making suppliers’ offers more transparent, and in particular avoiding the abuse of freedom in setting prices, simplify variable price contracts or introduce a standard product. Another avenue explored is that of pushing suppliers to offer fixed-price contracts rather than variable prices, which they favor today but which make customers more insecure. An incentive would be the reintroduction of the termination indemnity, abolished in 2012 to encourage more attractive offers. This mechanism requires the consumer to pay compensation in the event of early termination of the contract. A first estimate of the amount is between 100 and 150 euros but, given the soaring prices, it is considered insufficient by the suppliers. The Minister for Energy, Tinne Van der Straeten, has instructed the CREG to continue its work on the issue.

The CREG also focuses on the excess profits of energy suppliers and producers. It recommends analyzing whether the pay-as-you-go contribution imposed on the nuclear sector can be revised upwards (for 2022, it will currently amount to 638 million) and whether it is possible to review the annual fee of 20 million Euros due for the Doel 1 and 2 reactors. Gas-fired power plants are also targeted, as they also benefit from soaring prices, as well as offshore wind power. For an average household, the energy bill could increase to around 9,245 euros for the next 12 months if they benefit from a fixed price contract drawn up in September. However, many households still have an offer established earlier, but by the end of March, their proportion will have dropped to 30%. For variable price offers, the estimate is “extremely difficult”. Between the prices at the end of August and those at the beginning of September, the expected annual bill varies from 9,772 euros to 6,249 euros.