Who benefits most from this more favorable arrangement?
Over the next two months, all Dutch households will benefit equally: they will all receive a €190 discount on their energy bill in November and December.
For gas, the adjustment is modest: it was 1.50 euros for all use under 1,200 cubic meters. That has become 1.45 euros. The price ceiling that takes effect on 1 January has become more generous in particular for electricity: the ceiling is no longer 70 cents for the first 2,400 kilowatt hours, but 40 cents for the first 2,900 kilowatt hours. The government takes the difference between that amount and the market price on her behalf. That market price is around 80 cents for the people who are now getting a revision of their contract.
The cabinet has chosen to allow the extension to take place via the electricity bill, because all Dutch people use electricity. As a result, people who use little or no gas at all now also benefit fully. This mainly concerns households with a heat pump. In the old plans they were relatively badly off, while the cabinet wants to stimulate the use of heat pumps.
There is also good news for the more than half a million Dutch households that are connected to district heating. Until now, district heating was not covered by the ceiling. A price ceiling has now also been set for this: EUR 47.39 per gigajoule of heat. It is not yet clear to what consumption this ceiling applies. The government will work on that in the near future.
Finally, the cabinet promises a solution for the approximately 450 thousand Dutch people who are now on a so-called ‘block heating’. Until now, they have been left out because they often share one boiler with an entire residential complex and sometimes also an electricity connection.
How do consumers receive the 190 euros in November and December?
That goes through the energy companies. They have to deduct 190 euros from the advance that their customers pay that month. For people who have to deal with high energy bills, this will provide significant relief. Anyone with an energy bill that is less than 190 euros will receive money back from the energy company in the coming months.
Despite this donation, many households retain the price incentive to be frugal, emphasizes Puk van Meegeren of Milieu Centraal. ‘There will be no price ceiling in the coming months, so high rates are still being passed on. Then saving on energy consumption saves a lot of money.’
Who implements the price cap?
That also lies with the energy companies. They charge their customers market rates, but once they fall above the price ceiling, they are only allowed to charge the ceiling prices set by the government. The income that energy companies miss out on due to the price ceiling is reimbursed by the government.
Whether the energy companies can implement this will be exciting. There are about sixty companies that supply energy to small consumers. How complicated it is for them to enter the price cap varies per provider. The discount on the November and December accounts will still be manageable. But even with the best ICT systems, the price ceiling proves to be a tough issue, according to telephone conversations with several energy companies.
For example, what happens to the calculation if a customer switches to another provider halfway through the year. Spokespersons for major energy companies did not yet have any bite-sized answers on Tuesday evening. ‘All this has to be worked out in discussions with the cabinet in the coming months.’
Is there a chance that energy companies will abuse this?
Because of that price ceiling, energy companies can ask what they want, the state will make up anyway. That suggestion is circulating on social media and also in politics. Recent rate increases at Vattenfall, Eneco, Essent and Greenchoice contributed to this. But it’s not that simple. If companies are already out to abuse the government scheme through their customers, they are taking a risk. The Authority for Consumers and Markets checks that they do not make extortionate profits. In addition, the companies run the risk that customers will switch en masse to other providers. Certainly customers who use more than what falls below the price cap will pay close attention to whether their provider is more expensive than another.