Energy costs expected to fall for everyone as Cabinet works out a deal with energy firms

Political leaders in The Hague have nearly concluded an agreement with energy companies that will bring down electricity and gas costs for most households, reported broadcaster NOS. The final details are still being worked out in talks between the Cabinet and the businesses about measures which can be quickly introduced to combat the high cost of energy. Though sources close to the talks told NOS the meeting would almost certainly result in a done deal, sources told newswire ANP on Monday that “it can still be a long evening.”

Households should see a reduction in the advance payments they need to pay for energy bills in November and December, NOS reported. Then, starting in January, the government will take over payment of a portion of energy bills. This will be the case regardless of household income.

Sources told the broadcaster that households will start the year by paying for a portion of their energy use based on energy rates at the beginning of 2022, before the Russian invasion of Ukraine sent prices skyrocketing. The government will pay the difference between the low rate and the market rate for all energy use below a specified threshold that has not yet been determined. Energy use above that threshold will be charged at current market rates.

The government is expected to use an estimate for average energy consumption in their calculations, but the broadcaster said that essentially people living in a well-insulated small apartment should see a total reduction in energy bills. Those residing in a poorly insulated large home that uses more energy will see a more limited reduction. Newswire ANP said that the government wanted the price cap in place for energy consumption of a maximum of 3,300 kilowatt hours of electricity and 1,500 cubic meters of gas. NOS said that the figure could be reduced to averages provided by Milieu Centraal: 2,479 kilowatt hours of electricity and 1,169 cubic meters of gas.

It was previously reported that the abnormally high energy prices this year could push a million households into financial difficulty, including over 600,000 who never had trouble paying their bills in the past. Although the measures will cost billions of euros, the Dutch State is also earning billions more than normal on gas extraction. The cost will be further offset with the European Union plan to charge electricity producers a new profit tax.

Regardless of the limits for the lower rate, all households will be strongly encouraged to conserve gas and electricity. Final details of a price cap will likely be announced by Rob Jetten, the minister for energy and climate, Tuesday as part of Prinsjesdag. The day is annually held on the third Tuesday of September, when the ruling government has to present their budget package for the upcoming year.

The price intervention will be in addition to the 1,300 euros offered to low income households for energy assistance. Additionally, the reduction in tax paid on energy will still be reduced next year, NOS said.

The Cabinet has also negotiated to block the energy companies from shutting off electricity and gas to households who fall behind on payments this winter. They will get at least a six-month grace period to conclude a payment agreement. The Cabinet is still pushing energy companies to offer multi-year contracts again, instead of the variable rate contracts most households are now required to sign when closing new details. Anyone who terminates a fixed rate long-term contract will have to pay a higher maximum penalty of 50 euros for breaking a deal for gas, and 50 euros for breaking an electricity agreement.