Energy prices: The electricity bill of many households will … increase

Vreg, the Flemish regulator for the electricity and gas market, has announced the introduction of the capacity tariff for electricity. Due to this new tariff, the electricity bill of at least one third of Flemish households will increase by 20 to 100 euros per year.

At the minister’s request, Ghent University has calculated the impact of the new capacity tariff on households. Although the results depend on a number of factors, the study shows that many households would add between €20 and €100 to their annual bill.

Small consumers in particular are victims of the capacity tariff. This mainly affects households that consume less than 900 kWh of electricity per year. Second home owners typically fall into this category, but so do some 150,000 households equipped with solar panels and the common areas of apartments whose bills are paid by the individual occupants. Depending on the meter type – conventional or digital – their bills increase by 50 to 100 euros per year.

In addition, somewhat smaller customers, whose annual consumption is between 900 and 2,350 kWh, lose out with the capacity tariff. This affects 447,000 customers, including 93,000 with solar panels, for whom the bill will increase by 20 to 50 euros if they have a traditional meter. In the case of connections with a digital counter, the calculation remains the same at best. Micro and small consumers together represent more than 27% of all households, for which the service tariff means an increase in the bill in all situations.

The majority of households – almost 60% – have a slightly higher average consumption of between 2,350 and 5,500 kWh. The study shows that there are winners and losers in this group of more than 1.6 million households, although the largest consumers can more easily balance the capacity tariff because the cost per unit of electricity consumed falls. With a digital meter, a lot depends on the average monthly peak in relation to the annual consumption and it is therefore worth consciously distributing the energy consumption. In Flanders, more than a million digital meters are currently installed in a total of 2.8 million households.

According to the study, large customers in particular benefit from the capacity tariff. This affects 160,000 households with a consumption of more than 5,500 kWh, which will save an average of more than 100 euros on their annual bill with both a conventional meter and a digital meter. In this sense, the power tariff could also make large consumers such as electric cars, heat pumps and electric heaters cheaper, but here too the condition that consumption is distributed applies.

For customers with an exclusive night-time tariff, who make up 5.6% of households, the bill would decrease slightly, but this may not apply to those with storage heating, which leads to high consumption peaks.

For homes equipped with solar panels and an inverter meter, it all depends on the size of the installation. For small systems below 4 kVA, the annual bill increases, for large systems from 6 kVA the performance tariff decreases. According to the University of Ghent, even after the introduction of the capacity tariff, solar panels remain an interesting investment in any case, since solar panels facilitate the distribution of consumption and limit the monthly peak.

Flemish energy minister Zuhal Demir is concerned and appears to be pushing for another postponement. “Revising a tariff system during an energy crisis, as required by the VREG, is not easy. (…) With current energy prices and the difficult situation families are in, we cannot be too careful. This study shows that my concerns are not unfounded.”

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