Bye-bye yearly energy invoice?
By our Energy & Utilities Consultants Thomas and Arthur
It’s something every household knows all too well, the yearly energy invoice. This system may become a thing of the past with the introduction of the monthly energy invoice based on your actual monthly consumption. Since we are assisting our clients in setting up this new way of invoicing, we want to give you an insight in this new way of billing.
From manual to digital?
As most evolutions in the energy market in the last few years, the monthly energy invoice is made possible by the introduction of the smart energy meter for gas and electricity.
In the past, most households had manual meters for gas and electricity with no option for data collection other than physically writing down the numbers of the meter at set moments in time. Based on those yearly numbers the energy companies calculated the yearly invoice.
To avoid consumers having to pay a giant energy bill once a year (and to make sure that energy companies have a cash flow) the advance energy invoice was introduced. The set amount of the advance energy invoice is based on an (often poor) guestimate of the amount of energy the household will consume in the next year and the fixed or variable price of gas/electricity.
So what about the monthly energy invoice?
The yearly invoice will become a thing of the past thanks to the new digital meters. The digital meter allows households and energy suppliers to view the energy consumption in a building automatically (every 15 minutes for electricity and every hour for natural gas). Based on this data, energy suppliers are now able to create an energy invoice for the exact amount of energy a household consumed in the previous month. For the consumer this new option is called the monthly energy invoice.
The monthly invoice still contains the standard subdivisions a consumer can find on their yearly invoice: Amount of energy consumed resulting in the energy cost, Net tariffs* and Levies**
* Tariffs that consumers pay to have the energy delivered to their building (distribution network tariffs, Capacity tariff, transmission tariffs, and transport tariffs). These tariffs can vary based on region and distribution grid operator (DGO).
** Levies: The Belgian federal government and the Flemish government levy different taxes on energy (energy contribution, special excise, and a contribution to the Energy fund). The percentage of VAT for residential clients has been reduced from 21 to 6 percent for electricity and gas and this for an undefined period. For Business clients there was only a temporary reduction of VAT on gas and this has almost come to an end. On 01/04/2023 their VAT will increase again from 6 to 21 percent.
What’s the impact for the parties involved?
The monthly energy invoice is good news for the consumers because:
- The invoice provides the opportunity to the consumer to pay their actual consumption per month eliminating the end-of-year invoice and thus avoiding a possible bill shock.
- It allows the consumers to adapt their energy consumption more swiftly from month to month. (Certainly, taking into account that the month of January represents an average of 18.37% of the annual natural gas consumption of an average household and July only represents 1.28% these months can become interesting measuring opportunities.)
- The monthly energy invoice also protects the consumer from failing energy suppliers. In case the energy supplier goes bankrupt then the consumer does not lose the advances they already paid.
On the other hand, for the suppliers and Distribution Grid Operators, this new way of invoicing is a big investment. They need to communicate their data at higher intervals and the billing/pricing engines of the energy suppliers need to be adapted to handle this new frequency. This results in big behind the scene changes. To adapt to these changes, our consultants are hard at work to assist our clients in setting up their new way of working.
Because of the high investments and the amount of work involved in implementing this new system, it will, initially only be offered by energy suppliers who supply more than 200.000 head points (Engie, Luminus, Mega, Total Energies & Eneco). They are legally obligated to offer this option to their clients as of the 1st of April 2022. Smaller energy suppliers are not obligated but are free to decide if they will offer this option to their clients.
So, as you can see, the digitalization of the energy market keeps making your life easier and more flexible. We at Trilations are very proud to be able to play our part in this transition together with our clients.
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