INTRODUCTION

With many European countries moving away from fossil energy fuels as part of the energy transition, and the tragic war in the Ukraine, 2021 and 2022 in particular, were characterised by increasing and even soaring electricity and gas sourcing prices and subsequent retail prices. The Netherlands did not come out unscathed. Seven out of the then 55 licensed household energy suppliers, or 13% of all licensed suppliers, were declared bankrupt or declared to be unable to supply energy. These failures led the Dutch national regulatory authority, the Authority for Consumers and Markets (ACM), to revoke the supply licenses of these energy suppliers, triggering a process whereby the affected household consumers were transferred to a Supplier of Last Resort (SoLR).

These failing energy suppliers were facing several challenges. First, many of these supplied electricity or gas on a prepaid basis. Another problem was an apparent mismatch between the energy suppliers’ sourcing costs and their retail revenues, as many household consumers were supplied under a fixed-term and fixed-tariff supply agreement. Increasing and rising or even soaring wholesale energy prices also led to wholesale parties enforcing margin calls under the sourcing agreements on the energy suppliers. The financial nature of this mismatch and these margin calls were the main, but not the only, cause of the demise of these seven suppliers in 2021. In the end, both household consumers and small and large businesses faced higher retail prices. This was not just the case for household consumers who were switched to a SoLR, which generally signed those consumers up under less favourable energy supply tariffs. Most household consumers and small and large businesses with permanent-term energy supply agreements also faced (steep) increases, but these generally did not take effect immediately.