“It cannot be the case that energy companies cut people off because of payment problems,” Minister Jetten (Climate and Energy) announced this week. On 1. In doing so, he made an expensive promise, because the consequence is that the cabinet will have to pull out its wallet again. If energy suppliers are not allowed to cut off non-paying customers from gas and electricity, they incur large losses. Then the profits that some are making now have quickly evaporated. So the sector says to the cabinet: all nice and nice, but can we catch up?
Purchasing power plates last less this year than a soft ice cream in the summer sun. Between October and July, the government took measures worth almost 7 billion euros to protect citizens against rising gas prices. A few weeks ago, the steam and boiling water coalition put together a new purchasing power-saving package reportedly worth at least 15 billion euros. The details will follow on Budget Day, but before the presentation, the cabinet has already concluded that it is not enough. Hundreds of thousands of households are facing acute payment problems this winter, unless the government allocates even more money for energy emergency aid.
It is certain that the government will do this. Relieving the financial distress of the energy poor has the highest priority. According to insiders, there will probably be an emergency fund for energy consumers with large payment arrears. The government has yet to negotiate how much the energy sector itself will contribute to that fund, but expectations are low. Although large parties such as Vattenfall, Essent and Eneco are fat on their bones, this does not apply to the forty or so small suppliers.
To avoid a series of bankruptcies in the sector, the government will probably have to open a credit line for energy companies in need. Only under this condition can providers continue to supply gas and electricity to customers who do not pay. The government then assumes the default risk.
emergency fund
The cabinet must also decide which citizens will soon be able to call on the emergency fund, and whether those people can count on full remission of their energy bill. One dilemma is the ‘moral risk’ of pardon. Calculating citizens may deliberately stop paying their energy bills, even though they can. In order to combat fraud, the Tax and Customs Administration should provide income data to energy companies, so that they can check the payment capacity of their customers. But that doesn’t just run into privacy concerns; The tax authorities and energy companies do not have the manpower for this either. From a technical point of view, sound fraud prevention is probably not feasible, say those involved.
An alternative is that consumers in need receive a lenient payment arrangement, whereby they can pay off the energy debt very slowly. Even then, the government must guarantee (or provide loans) for the outstanding debts via the emergency fund, in order to prevent energy companies from failing. The disadvantage of a payment arrangement is that it probably does not help the poorest households, because they cannot bear higher burdens at all.
Price ceiling
The government is considering setting a price ceiling for next year (earlier is not feasible). Different variants are being considered for this. The government could order that energy suppliers may charge their customers a maximum amount per cubic meter of natural gas and kilowatt hour of electricity, regardless of the market price. If the purchase price of the energy companies is higher than the amount that they are allowed to pass on, the government must reimburse the difference.
In effect, the government is writing a blank check. The costs for the treasury can run into tens of billions of euros if the gas price remains high and this measure applies to all Dutch households. This is another dilemma for the cabinet: if every household receives compensation, people who do not need help will also benefit. But selecting specific target groups makes each scheme complex and less feasible to implement.
PvdA and GroenLinks have proposed a price ceiling related to energy consumption. In this variant, consumers pay a low, fixed rate for the first x number of cubic meters of gas and kilowatt-hours of electricity that they consume per year. They pay the market price for consumption above that. In this variant, there remains a financial incentive to save energy, provided that the government does not set the consumption volume that falls under the low rate too high. Only: that would again be a problem for poor households in a poorly insulated home. They have a high energy consumption and would then partly have to pay the high rate, while wealthy homeowners who have invested heavily in solar panels and insulation do not have to.
The ideal solution does not exist, that much is clear by now. The cabinet has to work its way through a forest of dilemmas, in which every advantage has a disadvantage.