Whether you’re new to the Netherlands or a bonafide tote-bag-slinging, handlebar-swinging, biertje-drinking adopted Dutchie, one thing about this country confuses us all — prices. Specifically energy prices.
Speaking of, both these buzzwords have been featured a lot in the news and our nightmares lately.
It’s time to turn on all those lightbulbs (the metaphorical ones, not the real ones) and wrap our heads around the currently dropping gas prices in the Netherlands and how they interact with the Dutch price ceiling.
The rise and fall of gas prices in the Netherlands
First things first, let’s talk about energy, baby. The past year has seen some turbulent times across the world, and as a result, the price of gas and light in the Netherlands has been just as turbulent.
As of August 2022, the average annual gas and light contract set consumers back by a whopping €6,466.
The price for the same contract way back in 2021? Just €2,308. That means the cost of gas almost tripled in just 12 months — and it wasn’t cheap to start with.
READ MORE | How to take control of your Dutch utility bills in 5 simple steps
Now, the universe is making a correction. Gas prices are starting to drop again.
Why are some energy suppliers cheaper than others?
The reason behind this variation comes down to how and when the energy suppliers purchase the gas.
For example, larger suppliers may have purchased a lot of gas a few months ago when prices were higher. As a result, their rates remain high.
READ MORE | How to set up your utilities in the Netherlands (in English!) with PartnerPete
However, some suppliers may buy their gas on a month-by-month basis, meaning they chose to take the risk and see whether the prices improved each month — and right now, it looks like that was a very clever choice.
Since they get to enjoy cheaper gas prices, so do we! Right? Well, that’s where our little friend called the price ceiling comes in.
What is the Dutch energy price ceiling?
Put simply, the Dutch price ceiling is an initiative that was brought in by the Dutch government to protect Dutch households from dramatic rises in utility prices.
It works like this: if you use less than the average amount of gas and electricity, you can benefit from fixed reduced energy costs. These are:
- Electricity: up to 2,900 Kw/year at a rate of €0.40 Kw/h
- Gas: up to 1,200 m3/year at a rate of €1.45 Kw/h
This is the price ceiling. Simply put, your gas and electricity prices are capped up to the usage limits, which saves you money.
However, if you use above this usage, you will pay the market costs on the amount of energy that you exceed the price ceiling by. This means you’re at the mercy of whatever flips, switches and drops the prices of your current energy supplier decides to take.
Confused? That’s ok. Utilities are trickier to understand than the Wilhelmus sung by a boat of drunken Dutchies on King’s Day. That’s why there are services whose main purpose is to help internationals make the most of their energy contract, such as PartnerPete, which offers a contract coach.
What does this mean for your utilities?
Ok, so how does this affect your Dutch utility bill? Well, that depends on the specifics of your contract, your energy usage — and how much of a risk-taker you are.
READ MORE | Gas, electricity, water and more: ultimate guide to utilities in the Netherlands
William Zietse from the energy comparer website PartnerPete explains, “It’s better to opt for an established energy supplier that won’t go bankrupt due to volatile purchasing risks.”
He also points out that “these energy suppliers often also offer an app that gives you great insight into what your actual usage is. This, in turn, helps you to manage your usage and stay under the price ceiling usage for that month.”
This is good news for those who break the price ceiling
Surprisingly, the current drop in gas prices is actually good news for those of us who use above the average amount of energy.
Why? Because the market costs for certain energy suppliers have dropped dramatically, meaning that those who must pay the market costs won’t struggle against soaring prices.
Not everyone is going to benefit from lower energy prices
The key word here is certain. While the price for gas has dropped considerably for clients of smaller energy suppliers, those who are clients of larger suppliers will still pay relatively high gas prices when they break the price ceiling.
On top of this, as we have mentioned above, only those who break the price ceiling will actually feel this shift in the market. Those who use below the average amount and remain under the price ceiling won’t have to deal with market prices — good or bad.
READ MORE | Dutch cabinet plans new energy price ceiling: how will this affect you?
Speaking of, the amount of Dutch households who actually fall under the price ceiling stands at 80%!
This means that a significant portion of energy consumers will not be affected by the current drop in energy prices.
What determines whether or not you break the price ceiling? As William explains, “the size of your property, the energy label (how well it’s insulated) and the number of people living there are the biggest factors in this. Our advisors have some great tips on how to manage your energy consumption.”
So, should you switch your Dutch utility contract now?
That depends, does your current energy usage break the price ceiling or not? Let’s talk about it.
My energy usage breaks the price ceiling
Are you one of those whose bill will break the energy ceiling, but your current supplier hasn’t lowered their rates? Then it’s probably time for you to make the jump to a new supplier.
This is for a number of reasons. Firstly, according to RTL Nieuws, you could stand to save up to 10% on your energy costs if you switch to a provider that offers lower gas prices.
Secondly, it will soon cost you more to break your contract before the contract period is complete, so now is definitely the time to make the jump if you’re considering it.
Why is this? As of April 2023, the Netherlands will welcome the return of fixed energy contracts.
Fixed energy contracts and compensation
Dutch energy consumers are desperate for some security in such a volatile market. As a result, the Dutch government turned to energy companies and requested that they offer more long-term, fixed-rate energy contracts.
Energy suppliers agreed to do so under one important condition: energy customers must compensate the supplier for any commercial losses should they decide to switch contracts — and yep, that’s going to be as expensive as it sounds.
Once in place, this new rule will make it much harder for consumers to jump ship and change their contracts — but it also means that consumers will have to worry less about ever-fluctuating utility costs.
READ MORE | How to take control of your Dutch utility bills in 5 simple steps
If you know that you stand to cut your energy costs by switching suppliers or breaking your current contract, then yes, now is certainly the time to do so. This is only the case for those whose usage is above that of the price ceiling allowance.
Unsure of whether or not now is the time? William is quick to point out that “the actual timing of switching is tricky and involves many variables. Our team at PartnerPete monitors this daily and often advises customers to stay put until we give you the go-ahead.”
My energy usage does not break the price ceiling
However, if you are like most households in the Netherlands and do not break the price ceiling, then the experts at PartnerPete recommend holding fast until energy companies announce new fixed contracts are announced.
READ MORE | Reducing your energy bill in 2022: why you need a contract coach
Why? If your current energy usage falls under the limits of the price ceiling, jumping ship at the moment will only cost you money as you won’t benefit from the current drop in prices.
Many companies have announced new fixed contracts throughout April and May — that means now’s the time to compare providers.
How can I switch my Dutch energy contract?
Once you’ve decided to switch utility providers, generally, you’ll have to take two steps:
- De-register from your old provider.
- Apply to the new provider by providing your new address and an estimate of your monthly or annual usage.
Want to know when it’s time to make the move to a more favourable contract? Don’t we all! Thankfully, PartnerPete has a service specifically for this. Sign up for their Contract Coach programme, and you will immediately be notified when energy prices drop and you need to switch.
How have you been dealing with the current gas prices and the price ceiling? Tell us your thoughts in the comments below!
Hi
Title didn’t match with the content!
I expected to see some tips an tricks not the government subsidies and pricing news!