Watchdog tightens rules for early termination of energy contracts

The Netherlands Authority for Consumers and Markets (ACM) tightened its rules for the early termination of energy contracts. Customers who want to switch energy companies before their contract ends will soon have to compensate for the loss their energy company suffers as a result of the switch.

The ACM hopes the new rules will encourage energy companies to offer more fixed-rate contracts. Energy companies are currently reluctant to do so due to the high purchase prices for energy. Customers can switch contracts without significant penalties, but the energy company still has to pay high purchase prices for energy in advance.

“Suppliers are concerned that consumers with a permanent contract will switch quickly due to the low cancellation fee as soon as energy prices fall,” the ACM explained. “The suppliers are then left with the expensively purchased energy that the buyers had promised to purchase.”

The maximum cancelation fee will depend on the amount of energy the consumer would still purchase under the old contract and the price difference between the rate on the current contract and the current rate for the same contract with the same supplier.

The ACM’s new rules will likely take effect in April. Consumers who want to terminate their contracts early before that still fall under the old rules.