Price cap for energy
Millions of households in The Netherlands are facing soaring energy prices. Energy bills have increased by a factor 4 in some cases. Therefore, the Dutch government has introduced a price cap for electricity and gas. This plan has raised a lot of questions and concerns.
On this page we discuss everything you need to know about the price cap.
For example:
- For what rates the price cap applies
- Until when the price cap applies
- What the consequences are for your situation
Let’s dive right in.
What is the price cap for energy?
The price cap for energy basically means that your tariff for electricity and gas is limited to specific rates, set by the government:
- Electricity: € 0,40 per kilowatt-hour (kWh)
- Gas: € 1,45 per cubic meter (m3)
Good to know: these figures are including taxes and VAT.
Essentially, your energy supplier will not be able to charge you above these prices within the consumption limits.
Consumption limit
There is a maximum consumption built within the price cap:
- Electricity: up to 2.900 kWh in 2023
- Gas: up to 1.200 m3 in 2023
However, the total consumption is much less relevant. Whether you are above or below the consumption limit, is decided by looking at two things:
- Your consumption in the months before receiving your annual electricity bill
- Your consumption in the months after receiving your annual electricity bill
This is what you are supposed to consume per month in order to stay within the price cap:
| Month | Gas | Electricity |
|---|---|---|
| January | 221,2 m3 | 339,5 kWh |
| February | 188,0 m3 | 280,0 kWh |
| March | 158,6 m3 | 267,4 kWh |
| April | 85,7 m3 | 207,2 kWh |
| May | 34,9 m3 | 181,1 kWh |
| June | 18,7 m3 | 159,3 kWh |
| July | 17,2 m3 | 161,0 kWh |
| August | 17,3 m3 | 176,3 kWh |
| September | 24,3 m3 | 199,2 kWh |
| October | 80,9 m3 | 266,4 kWh |
| November | 146,7 m3 | 306,2 kWh |
| December | 206,6 m3 | 356,3 kWh |
Example
Let’s say you receive your annual bill on April 1st. In that case your consumption limit will be:
- Gas: 221,2 + 188,0 + 158,6 =568 m3
- Electricity: 339,5 + 280,0 + 267,4 = 887 kWh
For energy consumption within these figures, you will pay a maximum price of 40 cents per kilowatt-hour (electricity) and 1,45 euro per cubic meter of gas. For each unit above these limits, you will pay the market price in your contract.
For the rest of 2023 (april to december) your remaining consumption limit will be:
- 1.200 – 568 = 632 m3
- 2.900 – 887 = 2.013 m3
For who does the price cap apply?
The price cap is applicable for all locations that have a residence function or are used to carry out a business or profession.
Examples:
- Houses, flats and apartments
- Campings and summer homes
- Shops and office buildings
- Schools and healthcare facilities
- Hotels and restaurants
- Churches
SMEs and entrepreneurs
SME’s and entrepreneurs will have a much greater energy consumption than the average household. So these groups will only benefit to a limited extent. Although, the government has announced it will also introduce an extra financial support package for this sector, for example, bakers, growers and small and medium-sized enterprises.
Until when does the price cap apply?
The price cap will go into effect on the first of January 2023 and will last until the end of 2023.
A lot of smaller energy suppliers won’t be in time with implementing the price cap by the first of January, due to technical reasons. Nevertheless, monthly instalments will already be downgraded for all households by then, according to the price cap.
How much will I pay for energy in 2023?
Some people will benefit from the price cap more than others.
If you have an energy consumption that matches the price cap 1-on-1, then your total energy bill will expectedly be a maximum of 250 euro per month in 2023.
This is how your energy bill will be built up:
| Component | Tariff | Costs |
|---|---|---|
| Electricity, including taxes | € 0,40 x 2.900 kWh | € 1.160 |
| Gas, including taxes | € 1,45 x 1.200 m3 | € 1.740 |
| Tax reduction | -€ 597 | -€ 597 |
| Network costs (electricity) | € 326,78 | € 326,78 |
| Network costs (gas) | € 204,11 | € 204,11 |
| Overhead costs (supplier) | € 150,00 | € 150,00 |
| Total: | 2.983,89 |
The monthly bill will account to: € 248,66. This sum could be lower if the electricity tariff in your contract is below 0,40 euro per kWh, which is not uncommon in existing contracts.
Will I benefit from the price cap with a fixed price contract?
That depends on the prices in your contract. The price cap will only apply if the electricity and/or gas tariff in your contract is above the price cap rates.
- Is your electricity tariff above 0,40 euro per kWh? Then the price cap applies up to a yearly power consumption of 2.900 kWh. After that, you will pay the contract rate.
- Is your gas tariff above 1,45 euro per m3? Then the price cap applies up to a yearly gas consumption of 1.200 m3. After that, you will pay the contract rate.
Good to know: you won’t benefit from the cap if your current rates are below the price cap.
What if you have district heating or a heat pump?
It is expected that government will introduce a price ceiling for people with district heating, as they don’t have a gas connection. Although, no details about this have been announced.
The same applies for people that use a lot of gas and electricity for medical reasons. A majority of political parties have even backed a motion to provide special attention for these groups. Prime minister Mark Rutte has said that the energy price cap will be fine tuned to specific groups.
As for households that use a heat pump for heating, it is not yet clear if their electricity consumption cap will be increased. If not, their energy bill will most likely be higher in 2023, due to the increased VAT (21 procent).
Would it be wise to change my energy contract?
Even with the price cap in place, it could be interesting to compare your current energy contract with prices offered online. Especially, if your electricity and gas usage is beyond the consumption limits.
But be careful and always check the tariffs in both contracts before you make the switch. Also check what type of contract you are signing up for. Nowadays, there are also energy providers that work with dynamic tariffs that can change every day or even each hour.
Good to know: people with a variable contract will usually pay more when they switch to another energy supplier. This is because suppliers offer a discounted price for people that renew their contract.
An exception is made for households that generate a surplus in solar energy. For them, it might be a smart idea to change the energy contract, because the feed-in tariffs vary significantly per energy provider.
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