The newspapers have been full in recent months about rising gas and electricity prices. What impact does this have on the electricity price of employees who charge an electric car at home? And is it still worth it to drive electric or are you better off driving a traditional car on fuel again? Because fuel prices have also risen sharply in recent months.

HOW DO ELECTRICITY PRICES WORK?

As in other products, there are different markets to buy electricity. To hedge your need (baseload) in the future, you can buy on ENDEX. For short-term markets, there is BELPEX to have enough for your consumption on an hourly basis. And then there is the imbalance market on a quarterly basis that gives prices. Pretty complex stuff. As a consumer, there are not 1 but 3 different prices for residential on the Belgian market since the green power certificates depend on each region. There are always no windmills and few solar panels in Brussels so prices are always lower in this region.

Also important to understand is that the market price for a variable contract is not known until the end of the month. After all, it is a monthly average of that month. The CREG can only publish this after the end. So you can never apply the January tariff to January because it wasn’t known yet. We are obliged to always apply past rates naively to the current month. So there is some delay on reimbursement. With rising prices, you get underpaid first. When prices go down, you’re still overpaid afterwards. That’s how the system works. In addition, there is no click system on electricity so residential prices also fall back completely when wholesale prices fall.

We work below exclusively with the CREG tariffs that calculate average tariffs in the market for a family with a single meter and 3500kWh annual consumption. So there are cheaper but also more expensive supply contracts available in the market. CREG relies only on new supply contracts, while older fixed contracts are significantly lower currently.

WHAT ARE FUEL AND ELECTRICITY PRICES DOING?

In terms of electricity, we have seen stable prices for residential customers in recent years. But we note a recent increase in the market. But there are different markets. First, there is a wholesale market that reflects prices in the future but also in the short term. That translates at home into a contract with an energy supplier based on a fixed or a variable contract. A fixed contract is more likely to be based on a price for purchase in the future. Whereas those with a variable contract today base it largely on next quarter’s market price. Both markets have risen. But for those with fixed contracts before the price increase, nothing at all changes. Those just continue to purchase electricity at the fixed rate that was taken out.

For diesel and gasoline there has also been a strong increase in recent years. Since the decline at the beginning of Corona, a strong climb has begun and we are again achieving record prices. The price for diesel B10 rises to 1.826 euros per liter, an increase of 3.4 cents. Regardless of these increases, we know that the Cliquet system only partially returns any price drops. So a sharp drop is not immediately on the menu.

DOES ELECTRICITY REMAIN CHEAPER THAN FUEL?

That’s the question as both markets rise. Electricity prices are not known until the end of that month. That is not the case with fuel. Those are known for the next month. So the latest sharp rise in diesel and gasoline prices in February 2022 is currently out of the question. We take the month of January 2022 where both are available now. The cost price after all tax breaks is 6.71€/100km for electric driving in Flanders while diesel is 9.67€/100km and gasoline is even 11.19€/100km. Even now, electric driving remains more than 30% cheaper than diesel and 40% cheaper than gasoline. This is a decline, as it used to be 50-55% cheaper compared to diesel per km driven. But it still pays off, especially those who have not renewed their electricity contract or those who have solar panels. So, important in drawing up a proper TCO of a fleet is a good knowledge of the electricity market and its evolution. Otherwise, you will have unexpected costs that are not included.

An average consumption of 18kWh/100km for electric, 6.5l for Diesel and 7.5l for gasoline

3 TIPS FOR EMPLOYEES WHO CHARGE AT HOME

Tip #1: Those with a fixed home electricity contract entered into before fall 2021 will remain at this lower fixed rate throughout the contract term. Upon expiration, this will only be updated to the prevailing rates at that time. Those in this situation thus enjoy substantially higher refund rates but pay significantly less themselves. Not changing your energy contract is then obviously recommended. TIP 2: At the current electricity prices it is quite interesting to think about solar panels. The payback period falls from 7 years to 3 years if the current energy price remains so high, which is rather an exceptional scenario. But that this investment remains a good idea is certain. Even with a smart meter and capacity tariff, there are smart charging solutions for your electric car to minimize the cost for this or even be cheaper than with an analog meter. TIP 3: If you enter into a supply contract with your energy supplier today for say 1, 2 or 3 years, you are not obliged to remain under that energy contract for its entire duration, as with a cell phone subscription. You can change supplier at the end of each month, free of charge. Especially useful when market prices start to fall again.