Finance Minister: Households will save €2,300 because of energy price cap; Help is urgently needed
The price ceiling that the Cabinet wants to put in place for energy use will result in average household savings of about 2,280 euros on an annual basis, or 190 euros per month. Households will receive this discount from 1 November but it is still "full of uncertainties," emphasized the Ministry of Finance. When presenting the budget for 2023, Sigrid Kaag, the current finance minister, said it was imperative that the Cabinet begin helping people right away, and not just from January.
The Cabinet is considering a price cap of 1.50 euros per cubic meter of gas and 70 cents per kilowatt hour (KWh) of electricity. The finalized measure will officially take effect on 1 January, but the Cabinet has agreed with energy companies that they will already reduce the amount households are charged in prepaid installments starting on 1 November. This "intermediate version" will also provide "necessary relief" this autumn.
To prevent a maximum tariff from leading to higher consumption, the Cabinet wants to set a limit to the amount of energy that is charged at the lower rate. This will be fixed at roughly 1,200 cubic meters of gas and 2,400 KWh of electricity. That is somewhat lower than the proposal from GroenLinks and PvdA, which previously proposed a price cap plan. The idea is that at least half of households in the Netherlands will be fully below the the limit if they conserve on gas and electricity use. "The Cabinet wants to help all households," the ministry said.
Further elaborating on the plan is the Cabinet's highest priority, the ministry stated. It is not yet known how expensive the plan will be, nor how it it will be funded. The 5.4 billion euros that the Cabinet had set aside for the reduction of the energy tax can be utilized, as the tax reduction will not be introduced due to the new price cap plan. The Cabinet is also looking at the use of excess profits primarily earned by energy companies. If this does not yield enough revenue, the Cabinet will look for extra money in the spring to pay for the package.
Municipalities that want to do more for the poorest households this autumn can already begin paying out 500 euros in energy allowance for next year. There will also be an emergency fund from the Cabinet and the energy suppliers "to prevent vulnerable households with payment arrears from building up debts which are too large."
The maximum rates for gas and electricity that the Cabinet plans to introduce will also apply to small and medium-sized companies that were eligible for a discount on their energy tax on the basis of their consumption. In addition, work is being done on a "specific package" to support large consumers, such as bakers and greenhouse growers.
This aid for the business community, which the Cabinet announced on Budget Day, came as a surprise. In recent months, the Tweede Kamer repeatedly asked the Cabinet in vain to help out entrepreneurs who are sometimes even forced to close their doors due to the high energy prices.
The Cabinet also wants to help companies become more sustainable, so that they can reduce energy consumption themselves. To make this possible, extra money will be made available for "various green reductions."
People who are already struggling to pay their fixed costs cannot wait until next year for the Cabinet to introduce measures to help them. That is why there have been feverish consultations about the energy price ceiling, said Finance Minister Sigrid Kaag when presenting the budget in the Tweede Kamer.
The budget for next year includes a package of purchasing power measures that adds up to more than 17 billion euros. This year, 7 billion euros had already been set aside to cushion the consequences of inflation, particularly the sharply rising energy bill. Until recently, the government maintained that no more measures would be possible this year, mainly due to implementation problems.
According to Kaag, the fact that something turned out to be possible at the last minute is due to "an interaction between government, energy suppliers and decision-makers in Brussels." She emphasized that the price cap is a temporary measure that should remove part of the uncertainty among households.
The most vulnerable groups will see their purchasing power improve the most as a result of the measures, including the substantial increase in the minimum wage. "But we are still trying to find the balance on a very tight rope," warned Kaag. "We cannot remove all the effects of inflation. We will not reach everyone."
The minister also emphasized the importance of sound public finances and the need for investments in, among other things, education, defence, climate and nitrogen policy. "The problems of today should not deprive us of our view of the future."
Reporting by ANP