The government has agreed a deal with energy companies to limit prices from November, weeks after insisting it would be unable to help households this year.

Details of the agreement are expected to be announced later on Tuesday by energy minister Rob Jetten, but NOS reported that it would take the form of a freeze on prices for average users.

From November 1 unit prices will revert to January 2022 levels for the first 1,169 m3 of gas and 2,479 kWh of electricity – the average amount used per household according to advice bureau Milieu Centraal. Any extra use will be charged at market rates.

Gas prices were less than half their current level at the start of the year, before Russia’s invasion of Ukraine triggered a surge in prices as Vladimir Putin’s regime squeezed supplies to fund the war, but were still twice as high as during the summer of 2021.

The cap will be in force until the end of the year, after which other measures will take effect allowing the government to take over responsibility for paying the bills of households that cannot afford them.

Jetten said last week that ‘no household in the Netherlands should be left in the cold this winter.’

Rebates and benefits

Prime minister Mark Rutte said at his press conference last week that any steps to mitigate the cost of energy would have to wait until the New Year. Until now the cabinet has resisted the idea of a price cap, instead compensating households through tax rebates and higher benefits.

However, opposition parties GroenLinks and PvdA met finance minister Kaag last week to press her to intervene faster and more directly to help people who are already seeing their bills rise steeply.

The government’s economic policy analysis bureau CPB warned in June that between 670,000 and 1.2 million households would struggle to afford essential goods such as food and heating this winter.

Low-income households are entitled to a €1300 contribution to their gas bill in 2022 and 2023, while the rebate on energy tax for all households has been raised from €560 to €785. Housing, healthcare and child support benefits are also being increased.

VAT for energy was cut in 2022 from 21% to the lower rate of 9%, but this concession will end in December.

On Monday economists at ABN AMRO urged ministers not to charge ahead with compensation measures because it risked creating an inflationary spiral.

The bank said the average monthly bill had gone up from €132 to €166 in the 12 months to August, although nearly half of homes are still paying fixed tariffs, some of which will switch to variable contracts before the winter.

Fixed contracts

The costs of the price cap will be partly met by not carrying the higher energy rebate into next year, as previously planned, which will save an estimated €6bn to €10bn.

The government also wants energy companies to start offering fixed-price contracts again. Currently only variable contracts are available because of the highly volatile energy market.

As a concession they will be able to raise the penalty for customers who quit their contract early, which is currently €50 for electricity or gas only and €100 for both fuels.