What does the price ceiling mean for your energy bill?

NOS Newsyesterday, 19:00

The government has announced a price ceiling for household energy bills from 1 January. In anticipation of this, energy bills should already be reduced in November. To what extent does this help people, how does it work and doesn’t it take a little long?

What is a price ceiling?

The government guarantees the maximum price of energy for the average consumption of a household. The average use is set at 1200 cubic meters (m3) of gas and 2400 kilowatt hours (kWh) of electricity. For everything that you consume more than the average, the normal market prices for gas and electricity apply. According to the cabinet, half of Dutch households do not live above the average.

The maximum price is probably 1.50 euros per cubic meter of gas and 70 cents per kilowatt hour of electricity. In yesterday’s letter to the House of Representatives, the cabinet is still making a small caveat: the maximum price of gas could go down slightly.

What does it mean for your energy bill?

Grab your calculator or your phone and the latest annual statement from the energy company. If the cabinet does not adjust these prices and consumption figures, you can make the following calculation:

The average consumption therefore amounts to 3480 euros per year, so that is a maximum of 290 euros in gas and electricity per month. That is still a lot of money for many people.

What if you have a fixed contract with a low fixed rate?

The government price cap guarantees a maximum price. If you are one of the lucky few who still has a fixed contract with a low rate with prices that are below 1.50 euros per m3 gas and below 0.70 per kWh of electricity, your energy bill will remain what it is until the moment that your contract expires. After that you will probably get a contract with a variable rate and you will therefore also pay the market price for all energy that you use more than the average.

Isn’t January 1 a little late? I’m already paying blue

The cabinet has waited a long time to take measures and now everything has to be done very quickly. The government and the energy companies still have to organize some things. Behind the scenes, a solution is being created that will lower your monthly energy bill in November and December, as if the price ceiling has already been set. The government and the large energy companies assume that this will succeed.

Can I still do something myself?

The energy company determines your monthly amount based on your energy consumption in the past year. Now that the price of gas and electricity is very high, it is more worthwhile than ever to save energy.

Energy companies have apps that are linked to the smart energy meter so that you can keep an eye on your energy consumption. Earlier we wrote this article with tips to save energy.

NOS/Thijs Geritz

Is the price ceiling sustainable?

High energy prices stimulate sustainability and energy saving. Viewed in this way, the subsidy that the government is now giving to households is not sustainable. Because prices are now so high that a large part of households simply can no longer pay the bill, this is taken for granted.

If the price ceiling can be abolished again in a year’s time, according to experts, this will not be such a big problem. Should it take longer, the price ceiling could delay investment in heat pumps and other sustainability measures.

What if I can’t pay my energy bill in the coming months?

The energy companies and the government are striving to ensure that no one will be left out in the cold this winter. Initially, the energy companies try to make payment arrangements themselves with customers who are in financial difficulties. If that is not possible, people are guided to the debt relief association. In extreme cases, an appeal can be made to the emergency fund that the cabinet has set up.

In principle, no one will be cut off from gas and electricity this winter. But energy companies and the government have not yet agreed on the conditions. If someone does not pay, does not answer the phone and does not cooperate in any way with a payment arrangement, then disconnection cannot be ruled out completely.

What happens to the baker and the butcher on the corner?

Not only households, but also many small entrepreneurs are in trouble because of the high energy bill. Some of those small businesses will be able to take advantage of the price cap and pay a little less for energy bills, but that will not solve the problems completely.

The cabinet is therefore investigating the options for a subsidy scheme for energy-intensive companies. The talks about this with small and medium-sized enterprises and the energy companies are currently being held and should provide clarity in November. This regulation will not apply to the large energy-intensive industry, such as the chemical industry and fertilizer, steel and aluminum factories.

When can I conclude a long-term permanent contract again?

Many people are nervous about the variable contracts where the price of gas and electricity is increased twice a year, or even more often these days. Energy companies offer little or no long-term contracts with fixed prices. This is because they have to hedge the risks of such a long-term contract with the bank, which is becoming increasingly difficult due to price fluctuations in the energy market.

Moreover, as a consumer you can still get out of such a contract fairly cheaply, should the energy price suddenly drop again, which could lead to problems for the energy company. The government wants energy companies to start offering long-term contracts again soon, but the conditions for this are still being negotiated. The fine for withdrawing from a permanent contract will increase.

When will we know how the new measures will work out?

There is still a lot to be done behind the scenes. Nevertheless, the cabinet was very keen to announce the contours of the price ceiling on Budget Day. The cabinet will present the detailed plans within two weeks, prior to the so-called General Financial Considerations in the House of Representatives.

The article is in Dutch

Tags: price ceiling energy bill

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