Terminating a Fixed Energy Contract in the Netherlands Early? Watch Out for the Price Tag!

Special thanks to GMW Lawyers for helping us with this article.

Consumers in the Netherlands can enter into a fixed energy contract where the price and duration are pre-determined. The energy supplier must provide energy at the agreed price throughout the contract period. This offers consumers certainty and protects them against potential energy market price increases. However, terminating this contract incurs costs. This article discusses the maximum cancellation fee for terminating a fixed energy contract signed on or after 1 June 2023.

When consumers terminate a fixed contract early, they are required to pay a fee to the supplier. The rationale is that the supplier needs to sell the energy the consumer would have used to other consumers (see also Dutch Parliamentary Documents). The ACM (“The Netherlands Authority for Consumers and Markets”) has implemented revised rules that came into effect on 1 June 2023. Below, we explain how the cancellation fee for energy contracts signed on or after 1 June 2023 is calculated.

The maximum cancellation fee for contracts on or after 1 June 2023

If you are a consumer, your maximum cancellation fee equals the loss incurred by the energy supplier due to your switch. The calculation for this is:

(remaining consumption if you were to remain a customer) x (current rate you pay – new rate for the same type of contract with the same supplier).

Example calculation

A consumer has a three-year fixed contract and wants to terminate it five months early. His electricity consumption during that period averaged 1,500 kWh in previous years. In his old contract, he pays €0.60 per kWh for this. In a new 3-year contract with the same supplier, he pays €0.50. If he terminates, the supplier incurs a loss of €0.10 per kWh. The maximum cancellation fee in this case is 1,500 kWh x €0.10 = €150.

Read Also: 6 Things to Consider Before Signing A Settlement Agreement in The Netherlands

Exceptions: no cancellation fee due

The Policy Rule Reasonable Termination Fees License Holders 2023 (“De Beleidsregel Redelijke opzegvergoedingen vergunningshouders 2023”) specifies the following cases when no termination fee is due:

• The consumer terminates a contract with variable or dynamic rates (article 3, paragraph 2 Policy Rule)
• The energy supplier terminates the contract (article 3, paragraph 3 Policy Rule)
• The contract does not clearly state that the consumer must pay a termination fee (article 7, paragraph 1 Policy Rule)
• The contract does not clearly state how the consumer calculates this amount (article 7, paragraph 2 sub a Policy Rule)
• The consumer receives the termination fee bill too late: for example, only in the final bill (article 7, paragraph 2 sub d Policy Rule)
• The consumer terminates his contract within the so-called statutory cooling-off period (“wettelijke bedenktijd”) of fourteen days (article 8 sub a Policy Rule)
• The consumer terminates the contract within the last seven days of his contract (article 8 sub b Policy Rule)

Be sure to check the cancellation fee on time!

To avoid surprises when switching to a new supplier, the consumer will receive a notice about the cancellation fee within a few days (Article 7, paragraph 2 under c Policy Rule). A cooling-off period of 14 days applies to a new contract. If the consumer was unaware of the cancellation fee or cannot pay it, they can opt out of the new contract within this period. The amount of the cancellation fee should always be obtainable from the supplier. Therefore, check the cancellation fee before entering into a new fixed contract.

If you have any questions about the above, do not hesitate to contact Lucie Burggraaff from GMW Advocaten.