Why is my energy bill so high?

You have probably noticed from your bills that energy prices have reached new highs. At OP we believe in clear and transparent communication, so we want to help you to understand the causes of this inflation and also what it means for the future. 

There are a number of factors that account for this increase, which has never been seen before:

• First of all, the recovery of economic activity after the pandemic has led to an explosive rise in electricity prices, due to a huge and sudden increase in demand.
•  The war between Ukraine and Russia has meant that supplies of Russian natural gas are virtually unavailable, and deliveries of oil have also been stopped. 
• Work being carried out on nuclear power stations in France is still dragging on, and this does not help with the rise in electricity prices for many European households.
• Belgium’s main provider of gas in the past was the Netherlands, which was providing 38.4% of Belgium’s gas, but the Dutch government has decided to exploit less and less of the reserves available to the country. We are therefore needing to buy gas from different sources and at different prices.
• Finally, maintenance work in the North Sea is limiting transportation of gas from Norway.

As a result, the price of electricity has tripled and the price of gas has quadrupled, according to the CREG (Belgian Federal Commission for Electricity and Gas Regulation). The energy sector is not the only one experiencing inflation (the price of food in the shops and air tickets have also been affected) but the situation now is that it is rising in an unprecedented way. Belgian households are suffering because of this increase in prices, which affects both individual properties and properties with co-owners, whose service charges are constantly increasing.

Measures introduced by the government

Due to the current economic situation, the government clearly had to make some changes, and a number of measures were therefore proposed to provide some relief to households in Belgium: 

• Until 31 December, the rate of VAT will be reduced from 21% to 6% for gas and electricity. This will happen automatically and will be shown on your annual bill.
• The Federal Public Service Economy has introduced a “heating oil voucher”, a single lump sum payment of €225, which we have mentioned in a previous article.
• The social tariff, which applies to many households, has been extended until 30 December 2022. The target group for this tariff has also been widened, so that more households can benefit from it.
• The Federal government is also in discussions with energy providers to allow Belgians to obtain reimbursement plans on request. 
• This Tuesday 6 September, a plan was discussed by the banks in Belgium to provide assistance to Belgian households. This would involve suspending capital repayments on mortgage loans and allowing citizens to pay interest only. The aim of this would be to help as many Belgians as possible to get through the winter. To benefit from this scheme, you will need to submit a request to your banking institution; more details are expected in the coming weeks.

Although these measures will provide some relief to households, they are far from adequate. This Friday 9 September, a meeting of the European Council of Ministers will take place to discuss this runaway inflation and think about other possible solutions for all the Belgian households affected by these costs. 

Is a substantial reduction expected in future? 

It is certainly possible that this could happen if Ukraine and Russia reach a peace agreement, but this is not expected soon. We therefore need to adapt to these price increases and not to expect price falls in the coming months, because inflation is still contributing to the economic situation.

As a specialist in real estate for more than 145 years, OP keeps a close eye on current affairs in the advice provided to all clients.