From June 1, new legislation will come into effect that will ensure that fixed contracts can last longer, rates will be lower and switching fines will be higher.
With us you will soon be able to benefit from these permanent contracts again, so that you can count on stable rates for longer periods. But what exactly does this mean?
Recently, energy suppliers have offered few or no contracts with fixed rates. Instead, it became common to offer variable contracts with monthly price changes. If it was possible to conclude a permanent contract, it often had a term of less than 1 year. But the government wants Dutch consumers to again have the option to conclude contracts with fixed rates for 1, 3 or even 5 years.
To achieve this, the fines that consumers pay in the event of premature termination of their contract must be adjusted. This has to do with the difference between purchasing and selling prices that suppliers must compensate. The old fine model was known as ROVER: Reasonable Termination Payment for Permit Holders. From June 1, 2023, this will be replaced by ROVER 2023.
1. Previous model ROVER
Until June 1, a consumer will receive a relatively small fine if he terminates his contract prematurely. The fine amounts vary up to a maximum of €125 per product. So if you have both gas and electricity, the maximum fine is €250. In the past, this fine was reasonable and covered part of the margin loss suffered by a supplier. However, with the current developments in rates, this fine no longer covers the loss of margin by a long shot. That is why a new fine model has been designed.
In the table below you will find the amount of the cancellation penalties before June 1, 2023. The amount of the cancellation fee is per product and depends on the remaining term of the agreement.
| Remaining contract term | Cancellation fee per product |
|---|---|
| < 1,5 years | €50,00 |
| 1 – 2 years | €75,00 |
| 2 – 2,5 years | €100,00 |
| 2,5 years > | €125,00 |
2. New model: ROVER 2023
2.1 How does ROVER 2023 work?
The penalty model is being adjusted to compensate energy suppliers for the loss of margin they suffer when consumers cancel their contracts early. The termination fee will therefore be in accordance with the energy supplier's margin loss.
The following formula is used for this:
Cancellation fee = (the agreed price – the price of the reference product offering) x the remaining quantity.
The reference product is a current product that corresponds as closely as possible to the product that the consumer currently has. This takes into account the running time and the type of energy (grey/green). If no reference product is available, the product with the highest rates from an energy supplier will be used. If the price of the reference product offering is equal to or higher than the agreed price, no cancellation fee may be charged.
From now on, the amount of the switching fine will be considerably higher than what everyone was used to in the old situation.
2.2 Registration process
After the consumer has concluded a contract with the new energy supplier (with a cooling-off period of 14 days), the new supplier must immediately report this to the Contract End Register (CER). Within these 14 days, the old energy supplier must inform the consumer about any cancellation fee and its amount. This may be an indication of the price, because the final cancellation fee can only be determined after the consumer has been supplied by the new supplier.
Finally, energy suppliers must at all times offer their customers the opportunity to request an indication of the cancellation fee. This will practically be made available via the My environment of an energy supplier.
3. Positive effect of ROVER 2023
With the introduction of the new legislation, energy suppliers will have the opportunity to again offer long-term fixed contracts, with a term of several years.
Since the vast majority of households in the Netherlands currently have a variable contract, it is expected that a lot of activity will arise. Consumers will have the option to enter into a fixed contract with their current supplier or with a new supplier.
In addition to the fact that consumers have more choice regarding permanent contracts, ROVER 2023 will also have a positive effect on the rates that consumers have to pay. By ROVER 2023, it is expected that more consumers will fully complete their contracts. This gives energy suppliers the opportunity to extract part of the risk premium from the rates, because there is more certainty that the purchased energy can actually be delivered to those consumers.
Apart from the above, geopolitical developments will always continue to influence rates, both positively and negatively.
4. Summary
ROVER 2023 will come into effect from June 1, 2023. This brings some important changes:
- Termination penalties will differ significantly from current penalties. They will mainly apply in a declining market.
- As soon as a consumer concludes a new energy contract, the new supplier must immediately report this in the Contract End Register (CER). In this way the old energy supplier is informed.
- The old energy supplier must inform the consumer “immediately” about the estimated amount of the cancellation fee.
- Consumers must always have the option to request the amount of the cancellation fee, especially if they want to switch to another energy supplier.
- A positive consequence of ROVER 2023 is the greater availability of fixed energy contracts with lower rates. This gives consumers more choices.
With the introduction of ROVER 2023, they aim for a more transparent and flexible energy market, where consumers are better informed about cancellation penalties and the options for permanent contracts with favorable rates.