Danish electricity companies blasted for ‘borrowing money from consumers’

The Danish Consumer Council (Forbrugerrådet Tænk) recently called out energy companies for acting as banks by charging consumers in advance during an energy crisis.

The Danish Consumer Council recently criticized energy companies for charging consumers in advance during an energy crisis. Photo by 6enjamin d / Unsplash

Four out of five Danes are looking for ways to save money due to the high electricity prices, according to a recent Consumer Council survey.

Electricity prices have gone up throughout the country. Still, not a single electricity company promotes the option of paying for actual electricity consumption ​​on their website (arrear payments) despite several of them offering the option to customers, the Consumer Council warns.

The organisation is critical of such behaviour, noting that it amounts to “bad information for the consumer,” which in some cases has resulted in customers getting bills of up to three times more than their actual consumption.

“Consumers de facto act as banks for the companies. We can see that the amounts collected are often significantly higher than what has been used,” Consumer Council chief Mads Reinholdt told TV 2.

Survey results

In the Consumer Council’s survey, 30 out of 40 contacted energy companies responded.

It is possible to pay for actual rather than expected consumption at 10 of the 40 companies the Council reached out to.

However, nine of the ten do not advertise the option, and several companies also require a credit rating or fee from their customers before they allow them to pay for their actual usage, TV 2 reports.

The survey also showed that 53 percent of Danish consumers prefer arrears payments, while 34 percent prefer advance payments.

One of the country’s largest energy companies, Andel Energi, says that the majority of their customer base already pays for actual consumption. Therefore, they believe there is no need to promote the option.

“Generally, we have always invoiced in arrears, and we continue to do so. This, of course, means that a very large proportion of our customers are currently on (the) arrears (model),” a manager in the company, Jack Kristensen, stated.

“Unless the customer wants something else, they will basically be set up with arrears payments,” Kristensen added, noting that all new customers pay for actual consumption.

Risk associated with advance payments

Mads Reinholdt warns that consumers who pay for electricity in advance cannot get their money back if an electricity company goes bankrupt.

“They take on the entire risk by paying for a product they never received. It is completely unreasonable. If a company goes bankrupt, consumers risk not getting their money back,” he warned.

The energy crisis also means that companies are at greater risk of bankruptcy, so the risk is, therefore, even greater for consumers, who already pay more for electricity, the Consumer Council noted.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


How to apply for Denmark’s 6,000 kroner energy relief if you were missed by automatic payments

Denmark last year sent an automatic 6,000-kroner payout to eligible households in a measure intended to relieve people struggling with high energy costs. People who think they may qualify for the money, but didn’t receive it, can soon apply.

How to apply for Denmark’s 6,000 kroner energy relief if you were missed by automatic payments

The tax-free cash payout of 6,000 kroner was approved by parliament last spring in response to rising energy prices and sent out in August to households which met the set criteria.

The payments were made automatically, so no application was needed at the time.

Households with a collective pre-tax income of under 706,000 kroner were eligible for the one-off cash boosts. Additionally, the household should be primarily heated by individual gas heaters (or have experienced similar increases to bills as such homes) or be located in a district heating area in which the heating is produced by at least 65 percent gas.

But errors in registration data could result in households which meet the criteria not receiving payments automatically, the Danish Energy Agency said at the time.

People who believe that their household meets the criteria, but have not received the money, can therefore apply for it from early 2023.

A significant number of people also received the money even though they did not fulfil the criteria, for example because they had replaced their gas boilers but the registration data on their homes was outdated.

READ ALSO: Up to 70 Danes offer to pay energy money back to government

An additional application round for the heating cheques opens on March 14th, according to a notice from Energy Minister Lars Aagaard to parliament’s energy committee.

“The vast majority of households which are entitled to the heating cheque have received the payment. Some households, which are entitled according to the law have meanwhile seen circumstances which mean they unfortunately didn’t receive the cheque automatically,” he wrote.

Specifically, the Danish Energy Agency (Energistyrelsen) will open a digital application platform via the website

If your household did not receive the payout last year, you can apply for it if the household’s overall income in 2020 was less than 650,000 kroner (after the AM-bidrag tax contribution is deducted).

Application must be made within an eight-week window. You can enter your email address on the varmecheck website to receive a reminder when the application round opens.

“Reasons that households have not received the cheque automatically could for example be that there was data missing or not sufficiently ready for an automatic payment to happen, [or] that the oldest person in the household didn’t have a Nemkonto [designated bank account, ed.] for the money to be paid into,” Aagaard wrote in the parliamentary note.