Rising Energy Prices in January

This article was last updated on November 23, 2023

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Price increase due to market unrest and gas tax

Many Dutch households will see a rise in their energy bills from January, as a result of increasing gas prices. Two major energy companies have begun informing their customers about the new variable rates, attributing the increase to international gas market turmoil and a surge in gas taxes.

For 1 million Essent customers, the gas price for variable contracts will escalate from 1.3271 euros to 1.4494 euros per cubic meter. Similarly, at Vattenfall, the price will soar from 1.2975 to 1.5030 euros per cubic meter of gas.

Impact of tax increase and government policies

The substantial portion of the price hike is attributed to the higher gas tax, according to Vattenfall. The increased tax is part of the government’s strategy to promote the transition from gas to electric heating. However, the recent election results may spark debate regarding the gas tax increase. The Senate is yet to ratify the proposed tax hike in December.

End of price cap

The Dutch government had enforced a price ceiling for gas and electricity at the beginning of the year to safeguard households from exorbitant energy prices. However, from January 1, this safeguard will be eliminated, leaving consumers vulnerable to market fluctuations yet again.

Electricity prices and potential impact on consumers

While gas prices surge, the cost of electricity is expected to decrease marginally. The variable rates for electricity at both Essent and Vattenfall will slightly reduce, staying below the previous government-imposed price ceiling. However, the actual impact on consumers will depend on their contract and energy consumption.

The shift towards permanent contracts is gaining traction, with an increasing number of consumers opting for this option. Despite fixed prices, individuals with permanent contracts may still face higher energy bills due to the gas tax hike and rising grid management costs.

Consumer awareness and implications

A significant proportion of consumers may not be aware of the impending removal of the price ceiling in January. Research by Essent indicates that nearly a quarter of individuals are oblivious to this change. Notably, 6 percent of consumers currently possess a variable contract that exceeds the price ceiling, as highlighted by the Netherlands Authority for Consumers and Markets (ACM). The regulator has cautioned consumers to explore more cost-effective alternatives to mitigate potential financial burden.