Energy crisis: watchdog backs fixed price contracts and “standard product”

The federal energy watchdog CREG has unveiled a raft of proposals, which it says, if introduced, will help to tackle rising energy bills.

The watchdog is calling for the introduction of a kind of regulated contract that will set prices consumers have to pay for three or five years.  CREG’s report on measures to deal with soaring energy bills was discussed in parliament today.

The watchdog calls for more people to enjoy low social tariff prices or for a new tariff to be introduced that would also cushion the blow for middle income households. CREG also warns of the danger of social tariff prices rising to commercial levels.

It also calls for the reduced 6% VAT level to be maintained till wholesale prices reach “acceptable” levels.

CREG wants energy suppliers to be obliged to offer a new type of regulated contract that sets price levels for 3 or 5 years.  The government could compensate suppliers for any losses e.g. by offering guaranteed loans.  The price would be calculated on the basis of the average forecast for the period involved.  Customers would have to stay with suppliers for the entire period.

The watchdog favours the reintroduction of a cancellation fee to be paid by customers that cancel their contract early.  It argues this would stimulate energy companies to offer fixed rate contracts.

CREG is also eager to see a standard product that all suppliers should offer and that clients would find easy to compare. 

The watchdog now believes energy from the country’s four newest nuclear power plants will generate profits of 2.205 billion euros – up half a billion on the last calculation – this year. It argues in favour of increasing contributions from the nuclear sector.

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