Energy crisis and gas price brake in the Netherlands

Discussion about energy prices
This is how the Netherlands is doing with the gas price brake

The Gas Price Committee presented its plans for the gas price brake on Monday. Other countries have already announced plans. How does the Dutch model work?

The Dutch price ceiling will come into effect in January 2023 and will apply for a maximum of one year. Up to a consumption of 1200 cubic meters of gas, gas costs 1.45 euros per cubic meter. For electricity, the price ceiling is 0.40 euros per kilowatt hour, up to 2900 kWh. Everything that is consumed outside of that will cost the price agreed in the contract with the energy supplier.

The Dutch government also promised compensation for alternative heating methods such as district heating. It is 47.39 euros per gigajoule, a limit has not yet been agreed.

Minister of Finance Sigrid Kaag (D66) announced the price brake for gas and electricity in the Netherlands on 20 September, which was introduced two weeks later on 4 October.

Prices in September were two and a half to three times higher than last year. To help citizens pay the increased bills in November and December, every household now receives a discount of 190 euros per month on the electricity and gas bill. The Dutch government estimates the cost of aid in November and December and the brake on gas and energy prices at 23.5 billion euros. In the worst case, 40 billion euros is expected. Part is financed with an addition for energy producers and large companies.

However, the funding is criticized by economic experts. The price brake drives inflation, economists say. De Nederlandsche Bank, governor of De Nederlandsche Bank, said the support is understandable, but only “if it is targeted and the finances are in order”.

Consumer organizations such as the Consumers’ Association call the price brake ‘a step in the right direction’, but many poorer households find it almost impossible to pay the bill. Another criticism is whether the price cap discourages people from being energy efficient, especially for households that consume no more than the ceiling. Minister of Climate and Energy Rob Jetten (D66) does not see the problem: “The incentive to save remains. There will also be extra money to insulate and make homes more sustainable.”

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