Energy price cap definitely temporary, Finance Min. says

The price cap that will apply for gas and electricity next year will definitely be temporary, Minister Sigrid Kaag of Finance said in an interview with RTL Nieuws. If energy prices are still high when 2024 starts, the Cabinet will only give energy support to people who really need it, Kaag said.

For November and December this year, every household in the Netherlands will get 190 euros as a contribution towards their energy costs, the Cabinet announced on Monday. For 2023, there will be a price cap on the energy bill. Netherlands residents will pay reduced rates for average electricity and gas consumption. For consumption above the average, they’ll pay full market rates.

It’s not yet clear how high the price ceiling will be. That depends on how the energy prices develop. But it is clear that the measure will cost the treasury tens of billions of euros. “We cannot continue this for very long,” Kaag said to the broadcaster. “We did it now because the uncertainty was too great to help people through the winter.” In the spring, the Cabinet will figure out how to cover the costs of this measure.

Over the weekend, Klaas Knot of the Dutch central bank DNB appealed to the Cabinet to quickly scale down energy support to those who really need it. According to Knot, continuing to compensate everyone will quickly risk “government finances going off the rails.”

Kaag stressed that the government does not intend to keep the price cap in place after 2023. If energy prices are still high, the Cabinet will “look very closely” at what support is still needed for the winter of 2024. Future measures will be “only temporary and as targeted as possible,” Kaag said.