The pandemic, geopolitical tensions and the turning back of the Groningen gas tap – they are driving energy prices to record highs. Since this month, many Dutch people have also been charged that price for gas and light. At the same time, the government is trying to alleviate the pain. How does that work out?
About half are even more favorable
For the time being, millions of Dutch people are benefiting from the high energy prices. This mainly concerns people who have a permanent contract that was concluded during a favorable period. The Energy Monitor published this summer by the Netherlands Authority for Consumers & Markets shows that at the time 56 percent of the 8 million Dutch households had a contract with a term of 1, 2, 3 or 5 years.
A significant part of them has therefore not suffered from a higher energy bill to date. The fact that they are even improving is due to the compensatory measures taken by the government. In order to somewhat dampen the costs of the energy price, the energy tax has been reduced by 265 euros for all households and companies in 2022.
In addition, there is a further reduction in the tax on electricity, which depends on consumption. For an average household, that saves 150 euros on an annual basis. For people who use a lot of electricity, such as owners of homes that are off gas, this benefit can increase even further.
There is an extra plus this year for social assistance recipients with a favorable contract. They receive a one-off additional compensation of 200 euros through their municipality for the high energy prices.
Then there is a small group of Dutch people without a fixed energy contract who can just stand out favorably. This concerns people who live frugally or who have a very energy-efficient house. Because they have hardly any energy costs, a price increase does not outweigh the compensation scheme.
The other half usually pay tens of euros more per month
About half of the Dutch have felt the increased gas price since 1 January. This concerns households with a variable contract for gas and light, whose rates are reviewed twice a year, on 1 July and 1 January. Customers who do not take any action when a permanent contract expires will also automatically receive such a variable contract from their energy supplier.
But those who went by the record prices that the gas price reached last autumn will be relatively relieved about the current rates. At the three major providers – Eneco, Vattenfall and Essent – customers have started to pay 20 to 30 euros more per month for average use. According to comparison site Overstappen.nl, the customers of the four largest energy suppliers on average spend about 30 percent more on electricity and 60 percent more on gas.
These energy companies have managed to limit the damage by purchasing relatively favorable energy for their regular customers in good time. In addition, the increase is dampened by the aforementioned compensation schemes.
For people with low incomes and high energy bills, for example because of poorly insulated homes and large families, these will still be significant setbacks. Especially in view of the fact that many products in the supermarket have also become more expensive due to the high gas price. For these people it is mainly hoped that the winter will not be very severe, says a spokesperson for energy company Greenchoice. ‘Energy companies estimate what people use, if that is considerably more because it is very cold, that of course adds up.’
A very harsh winter could ultimately lead to an even greater setback. If massively more energy is used than the suppliers had purchased, they will have to buy extra gas at the then applicable, high rates. ‘Being energy efficient is always a good idea because of the climate’, says the Greenchoice spokesperson. ‘But it is now also an extra good idea because of the wallets of both the user and the energy company.’
A small part pays very high bills
This actually concerns everyone who is forced to switch to a new provider, for example young people who are going to live in rooms or people who have to conclude a new energy contract after a divorce or move. And then there is the group of tens of thousands of Dutch people whose energy provider went bankrupt in recent months.
All these groups will indeed have to deal with the records that the European gas market broke again last month. ‘In the past, gas cost about 50 cents per cubic meter, now the price is often well over 2 euros,’ says Tom Schlagwein of Overstappen.nl. ‘To give you an impression: with 1 cubic meter of gas you can take a warm shower for about 25 minutes.’
Many energy companies actually prefer not to bring in new customers at the current rates. If the gas price falls again around the spring, those customers will probably switch quickly (for a fine of 250 euros) and leave the energy companies with the expensive gas.
‘We therefore find it irresponsible to conclude long-term contracts under these circumstances,’ says an Eneco spokesperson. “We have to get through this uncertain period first.” They see very little activity at Overstappen.nl. ‘In December, which is normally a busy month, 80 percent fewer people switched via us,’ says Schlagwein.
The few energy providers that are still actively trying to win new customers do so with contracts that anticipate a fall in gas prices in the spring. ‘For example, contracts are being offered for four months to bridge the period until April. Budget Energie and Energiedirect.nl actually offer contracts that take effect from April.’
Whether Europe will indeed pay less for gas by then remains very uncertain, with rising geopolitical tensions surrounding Ukraine.