Commodity component

24 On top of the transmission system operator, there are eight gas distribution networks.

25 Only a rough estimate of the number of EAN connections is available.

26 The number of EAN connections for each of the four gas distribution companies were retrieved (rounded figures) from their websites.

27 In 2017, National Grid Distribution began business under a new brand, Cadent.

28 With the exception of Germany, as German authorities do not report HHI indices anymore. Therefore an older HHI index is used for Germany. However, as German authorities plan to calculate HHI indices in the future, future updates will contain the German HHI published in the CEER report from the moment it is published.

CREG – A European comparison of electricity and natural gas prices for residential and small professional

Selection of products portfolio

Based on the HHI-index for each country, and each utility, a number of products to be selected has been defined. In order to define which products will be taken into account for the price comparison, the following rule of thumb needs to be followed:

• The first product to be taken into account is the standard product of the market incumbent;

• The second product to be taken into account is the cheapest product on the market, not taken into account any lump-sum reductions. The cheapest product will be retrieved through a price comparison tool in each country²⁹;

• The third product to be taken into account is the cheapest product of the market incumbent through the price comparison tool of each respective country. In certain cases, it is possible that these comparison websites are not up to date and are presenting prices of contracts from a previous month³⁰.

• The fourth/fifth product to be taken into account are one/two of the cheapest products of the second largest supplier that has not been taken into account yet.

It might happen that a product of the market incumbent might be the cheapest product of the market. In that case, this product will be weighted equally with the other product of the market incumbent, and the cheapest product will be omitted.

As the total number of products doesn’t change, the next product (e.g. instead of the third the fourth product) will be selected.

In case a supplier has only one product. In this case also the next product will be selected.

Weight of each product within the product portfolio

The selected products will be weighed as followed:

• The switching rate (in %) for each utility in each country will be the weight that will be attached to the cheapest product (second product to be taken into account)

• The remaining share (100% - switching rate) will then be used to weigh the other products as follows:

o If the remaining products are two products of the market incumbent, the weight of both products will simply be the remaining share (100% - switching rate), divided by two³¹.

29 A limitation of this method exist as it is possible that in some cases, suppliers take the new network charges into consideration in their products, which has an impact on the ranking of price comparison tools.

30 It is possible that in the beginning of the month (or even later), price comparison tools do not publish the most recent information available at that moment in time. In those cases, prices of contracts from previous months could be taken into account.

31 Example: if the switching rate amounts to 20%, the remaining 80% will be used to weigh the two remaining products of the market incumbent, which each account for 40%.

CREG – A European comparison of electricity and natural gas prices for residential and small professional

o If there are products of other market players taken into account, the normalised market shares of the selected market players will be extrapolated to the remaining share (100% - switching rate)³². o In case more than one product of a certain supplier is selected, each

of them will receive the same weight (and hence has the previously determined weight of the supplier, divided by two).³³³⁴

• Switching rates were retrieved on the Retail Markets Monitoring Report by the Council of European Energy Regulators and make the distinction between residential and small professional consumers.³⁵

32 Example: if the switching rate amounts to 20%, the remaining 80% will be used to weigh the remaining products. If the market share of the incumbent is 40% and that of the next largest supplier is 20%, in a first step, their market shares will be ‘normalised’ (respectively 40%/60% = 66,67% and 20%/60% = 33,33%). These market shares are then extrapolated to the remaining 80% (respectively 66,67*80% = 53,33% and 33,33*80%= 26,67%.)

33 Example: In case the switching rate amounts to 20%, and the market incumbent of the previous example has two products selected in the mix, each of its products will have a weight of 53,33%/2 = 26,66%.

34 An exception is made for the electricity profiles in France, as most clients still have a regulated product. Therefore, the market share of the regulated product is maintained, and the third product is 100% - the switching rate – the market share of the regulated product.

35 Yet, the Netherlands and Belgium don’t publish separate data for residential and non-residential consumers. For these countries, the combined annual switching rate was therefore used as published by the Energy fact sheets from the European Commission.