Parliament greenlights energy price cap, despite many concerns

The Tweede Kamer, the lower house of the Dutch parliament, has many concerns and questions abou the energy price cap taking effect in January. It is “not the most brilliant scheme ever devised by the government,” Henri Bontenbal (CDA) acknowledged. Nevertheless, a parliamentary majority supported the scheme.

The Kamer only received the 89-page proposal this week. The Cabinet has not asked the Council of State for its advice as usual. SP, PVV, and parliamentarian Pieter Omtzigt were most critical of the plan, which the government developed under tremendous pressure. Omtizgt called the price cap the “privatization of social security.”

Proponents - the coalition party and left-wing opposition PvdA and GroenLinks, among others - were also not confident about this “incredibly complex file.” They are afraid that companies will make substantial extra profits from tax money. They also worry about the supervision and control of the scheme, arguing for a more significant role for the Authority on Consumers and Markets (ACM).

According to Minister Rob Jetten (Climate and Energy), the regulators will “look deeply into the books” of energy suppliers to prevent them from making excess profits. The government bases their profit margin on the past four years, excluding their worst year. That did not sit well with all parties.

The Minister explained that those four years give a representative picture of the profit. The government is excluding the companies’ worst year because these past years included periods in which regular business operations were impossible, for example, due to the coronavirus pandemic and the war in Ukraine. His answers did not really satisfy the PvdA and VVD.

MPs were also concerned about the cut in the scheme before and after customers receive their annual statements. As a result, some people won’t be able to take full advantage of the price cap. According to Jetten, 95 percent of households will not be affected by the cut. But a parliamentary majority still insisted that the Minister does something about it.

It also disturbed the Kamer that the regulation for block connections is not yet in place. Jetten promised to send that to the parliament on Friday. It concerns 700,000 households that share a gas, heating, or electricity connection, such as flats or student homes. Their compensation will not come in January, but will be applied retroactively.

The price cap applies to gas consumption up to 1,200 cubic meters and electricity consumption up to 2,900 kWh. The cap will apply for a year and, according to current estimates, will cost more than 11 billion euros. The costs may turn out much higher. The Cabinet previously stated that the price cap could cost 23 billion euros and possibly even 40 billion euros. More will become clear in the spring, Jetten promised.

In the end, the Tweede Kamer approved the subsidy scheme, though the D66 called it “far from ideal.” The VVD agreed on that point. “It is an imperfect proposal,” said Silvia Erkens (VVD). Tom van der Lee (GroenLinks) called it an “emergency measure that is quite crude, but we will have to make do with it.”