Energy firm Essent raises rates significantly; Subsidized cap will still reduce most bills
Energy company Essent will significantly increase their variable rates for electricity and gas from 1 January. But due to the price cap introduced by the Cabinet, where the government will cover a portion of people’s energy bills, the impact of the rate increase will remain limited for most customers. According to the supplier, due to the government measures, bills will still be lower for 85 percent of households in January compared to the last months of this year.
Without the price cap in place, Essent’s price increase would mean that 2,900 kilowatt hours of electricity and 1,200 cubic meters of gas would have cost 501 euros in January, instead of 327 euros. Due to the price ceiling, consumers will pay 250 euros in January for that level of energy usage. Essent expects half of the customers to remain below this threshold, and the other half to pay the higher rate for all energy use above that limit.
The new prices apply for three months, after which Essent hopes only a slight rate adjustment will be necessary. The company said the rate increase is due to the scrapping of tax reductions on energy and higher purchase prices in the summer months. There is a delay of a few months after a purchase is made when determining the rates. As a result, Essent was unable to include the recent reduction in the price of energy in its new tariff.
Another factor is that energy companies must announce tariff changes at least thirty days in advance to comply with the demands of the regulator, Authority for Consumers and Markets (ACM). As such, it will take some time before customers notice the favorable energy market developments in recent months. That is why Essent is introducing new tariffs earlier than usual. Greenchoice will introduce a new rate change later this week, Eneco next week.
Competitor Vattenfall already announced a rate increase last week. ACM has stated that it considers Vattenfall's tariff increases to be "considerable". According to a spokesman, this increase is also included in an "intensified" investigation into the announced rate increases from suppliers. The supervisor will check whether these are reasonable on the basis of the cost increases.
If ACM finds the increase unreasonable, the supplier will be asked for clarification. After that, the companies are given another chance to adjust the rates themselves, before the regulator finally imposes a maximum rate. According to ACM, it has almost never happened where an increases was deemed to be unreasonable.
Reporting by ANP