EXPLAINED: How can households in Denmark postpone paying their energy bills?
A scheme allowing businesses and individual households to defer payments for excess electricity and gas bills, came into effect on November 1st. A similar scheme for heating bills starts on January 1st. Here's a look into how it works.
What's the aim of the scheme?
To help households and businesses from struggling with the increase in energy bills this year, the government has introduced a way to soften the increase.
From the 1st November, households and businesses can choose to 'freeze' ('indefrysning') part of their electricity and gas bills for 12 months, if the price is above a fixed limit. You will therefore still have to pay the part of the bill that is below this limit.
The scheme for freezing heating bills starts in January 2023.
How does it work?
If the price of your bill is above the ceiling price ('prislof'), set according to the price in the 4th quarter of 2021, you can have the part of the bill that exceeds this price, frozen and pay the rest as usual.
Gas
The price ceiling for gas is the gas price before tariffs, taxes and VAT. This is 5.84 kroner per m3, which corresponds to a typical consumer price of 15.45 kroner per m3.
Electricity
The price ceiling for electricity, before tariffs, taxes and VAT is 0.8 kroner per kWh, which is a consumer price of 2.18 kroner per kWh. This consumer price has been calculated before the upcoming reduction in electricity tax in the first six months of 2023.
District heating
Not all district heating companies have to offer the freezing scheme. If your district heating company is covered by the scheme, you will be able to freeze the part of your heating bill that exceeds 1.44 kroner per kWh.
When do you have to pay the 'frozen' bill?
You pay your utility bill which is below the ceiling price as usual but you don't have to pay the excess amount.
The excess bill is frozen for 12 months, which is followed by another year, interest-free. So you have to start paying back the frozen amount two years after the scheme starts.
Customers can then choose whether to pay their energy company the full excess amount, or pay it over a period of four years.
The interest rate is two percent per year, which accrues from the day after the energy bill is due, with one year interest-free. For businesses, the interest rate is 4.4 percent per year.
You have to tell your energy company how you are going to pay the money, no later than one month before the interest-free year expires. Otherwise, you will automatically be enrolled in the four-year instalment plan.
Customers can opt out of the scheme at any time during the process and settle the total debt straight away or over the four years. You can also opt back into the scheme after leaving.
Energy companies may charge an administration fee for the entire duration of the scheme.
How do I sign up?
The scheme is voluntary, meaning bill payers choose whether to freeze payments.
If your household pays the energy bill directly to an energy company, you are responsible for joining the scheme with your energy company.
You will be notified by your energy company when registration is open. The energy companies are obliged to inform their customers about the scheme.
If your household is not a direct customer of an electricity, gas or district heating company, for example you rent or are in an andelsforening, you cannot register directly with your energy company. It is the landlord or association who must register for the scheme and they are then responsible for applying it to your bills. But the scheme is voluntary.
After you have signed up, the total frozen amount will appear on your energy bills - or in a separate letter together with your bill.
Denmark’s largest energy company, Andel Energi has opened its digital registration for the scheme.
Its registration fee is 50 kroner excluding VAT per registered electricity and gas agreement and an annual administration fee of 88 kroner excluding VAT.
READ MORE: How do I check my Danish electricity plan and decide whether to change?
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What's the aim of the scheme?
To help households and businesses from struggling with the increase in energy bills this year, the government has introduced a way to soften the increase.
From the 1st November, households and businesses can choose to 'freeze' ('indefrysning') part of their electricity and gas bills for 12 months, if the price is above a fixed limit. You will therefore still have to pay the part of the bill that is below this limit.
The scheme for freezing heating bills starts in January 2023.
How does it work?
If the price of your bill is above the ceiling price ('prislof'), set according to the price in the 4th quarter of 2021, you can have the part of the bill that exceeds this price, frozen and pay the rest as usual.
Gas
The price ceiling for gas is the gas price before tariffs, taxes and VAT. This is 5.84 kroner per m3, which corresponds to a typical consumer price of 15.45 kroner per m3.
Electricity
The price ceiling for electricity, before tariffs, taxes and VAT is 0.8 kroner per kWh, which is a consumer price of 2.18 kroner per kWh. This consumer price has been calculated before the upcoming reduction in electricity tax in the first six months of 2023.
District heating
Not all district heating companies have to offer the freezing scheme. If your district heating company is covered by the scheme, you will be able to freeze the part of your heating bill that exceeds 1.44 kroner per kWh.
When do you have to pay the 'frozen' bill?
You pay your utility bill which is below the ceiling price as usual but you don't have to pay the excess amount.
The excess bill is frozen for 12 months, which is followed by another year, interest-free. So you have to start paying back the frozen amount two years after the scheme starts.
Customers can then choose whether to pay their energy company the full excess amount, or pay it over a period of four years.
The interest rate is two percent per year, which accrues from the day after the energy bill is due, with one year interest-free. For businesses, the interest rate is 4.4 percent per year.
You have to tell your energy company how you are going to pay the money, no later than one month before the interest-free year expires. Otherwise, you will automatically be enrolled in the four-year instalment plan.
Customers can opt out of the scheme at any time during the process and settle the total debt straight away or over the four years. You can also opt back into the scheme after leaving.
Energy companies may charge an administration fee for the entire duration of the scheme.
How do I sign up?
The scheme is voluntary, meaning bill payers choose whether to freeze payments.
If your household pays the energy bill directly to an energy company, you are responsible for joining the scheme with your energy company.
You will be notified by your energy company when registration is open. The energy companies are obliged to inform their customers about the scheme.
If your household is not a direct customer of an electricity, gas or district heating company, for example you rent or are in an andelsforening, you cannot register directly with your energy company. It is the landlord or association who must register for the scheme and they are then responsible for applying it to your bills. But the scheme is voluntary.
After you have signed up, the total frozen amount will appear on your energy bills - or in a separate letter together with your bill.
Denmark’s largest energy company, Andel Energi has opened its digital registration for the scheme.
Its registration fee is 50 kroner excluding VAT per registered electricity and gas agreement and an annual administration fee of 88 kroner excluding VAT.
READ MORE: How do I check my Danish electricity plan and decide whether to change?
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