Winter weather conditions, coupled with the escalation of the war in Ukraine, have led to a sharp rise in natural gas prices in Europe. On Friday, a new peak was recorded, fluctuating between 48.5 and 49.5 euros per MWh.
On the main Dutch futures market, which serves as a benchmark in Europe, the price of a megawatt hour of gas stood at Thursday's close at 48,3 eurosthe highest level in more than a year. These wholesale prices are increasing significantly since last February and recorded an increase of more than 20% since the beginning of the month in progress. For the moment, this trend seems irreversible.
What are the consequences on Belgian bills?
The effects of changes in natural gas prices will mainly be felt in the contracts of consumers with a variable contract, because in this type of contract, the energy part of the bill is determined by the average wholesale price of the month. Therefore, when wholesale prices increase, the bill follows the same trend for the relevant period. Additionally, November is traditionally one of the months when consumption reaches its peakeven if the months of December and January are generally the most energy-intensive.
It should also be noted that the price of gas and electricity are linked. In principle, renewable and nuclear energy generally costs little, and when demand is not high, the price of electricity is very low. On the other hand, as soon as production is not sufficient and it becomes necessary to use gas power plants, electricity becomes much more expensive.
Currently, electricity production is low due to unfavorable weather conditions (absence of sun and almost no wind). In addition to this, the reactor at the Doel power station has been under maintenance for several weeks. If we add to this the growing demand for energy, it is obvious that an increase in the prices of gas as well as electricity is inevitable.
Should we consider changing contracts?
The answer of course depends on the type of energy contract at hand. In the case of consumers with a fixed contract at an advantageous rate, it is preferable to keep it, especially for those who signed a contract last March, when rates were at their lowest.
So, it is not always fair to say that a variable contract is better than a fixed contract right nowbecause prices strongly depend on the state of the market. For example, current wholesale prices are higher than expected, making the variable contract more expensive than the fixed contract. The whole art therefore lies in signing a fixed contract just before wholesale prices start to rise again, which is almost impossible to predict.
