Netherlands further expands energy assistance for 2023 at a cost of €23.5 billion

The energy price cap that the Dutch Cabinet plans to introduce has been expanded far more than originally expected. The cost of the package will therefore rise considerably, with the government expecting the scheme to cost around 23.5 billion euros. This includes both the price cap that will take effect from 1 January, and the fixed discount of 190 euros that households will receive in November and December.

Consumers will pay a fixed rate of 1.45 euros per cubic meter of gas under the scheme, lower than the 1.50 euros the Cabinet said when it released its 2023 budget plan last month. A kilowatt hour of electricity will be charged at 40 cents, down from the proposed 70 cents. Following an initiative from left-wing opposition parties PvdA and GroenLinks, the Tweede Kamer insisted on expanding the energy proposal.

These lower prices apply only to a maximum of 1,200 cubic meters of gas consumption, and up to 2,900 kilowatt hours of electricity use. While the gas limit is the same as previously proposed, the electricity limit rose from 2,400 kWh. As such, households with a heat pump will be better off under the plan.

Because the package is more generous, the measures are also far more expensive. The government initially assumed the package would cost 10 to 15 billion euros. The total estimate of 23.5 billion euros reported on Tuesday is based on prices remaining at a comparable level to today, but the costs for next year could even rise to 40 billion euros in the most pessimistic case.

The Cabinet had already set aside part of the money to cover the cost of the the package. The reduction of the energy tax was due to decrease revenue by 5 billion euros, but the government shelved the tax reduction for the time being. Additional revenue could be raised from a package of measures that the European Commission is currently considering, which includes a solidarity levy on excessive profits earned by energy companies. Further funding for a portion of the program will not be determined until the spring. The Tweede Kamer will debate the financial aspect of the 2023 budget on Wednesday and Thursday.

Incidentally, other small consumers, such as the self-employed, associations, some small companies and "small social organisations" may also fall under the price cap, the government expects. A specific arrangement will be made for small and midsized businesses which consume a great deal of energy, such as bakeries.

Initially, the Cabinet insisted that it could only arrange a package to improve purchasing power by 2023, but political and social pressure to intervene in the autumn increased in recent months. The draft scheme that was presented on Budget Day was still being debated by policymakers until the last possible moment.