One of the government’s proposals to keep the energy bill affordable, is the energy price cap. This special provision will be effective from the 1st of January 2023 until 31st of December 2023.
Every household with an energy contract can take benefit from this provision. Read below what it means and how it works. Action also has to be taken by most of customers with an energy contract.
What is the price cap and how does it work?
With the price cap, the cabinet wants to help all households to keep rising energy bills affordable. From 1 November 2022, the costs of the energy bill already have been partly compensated. This temporary measure will continue until 1 January 2024. The energy cap consists of a consumption cap and a price cap:
The cabinet wants households with an average energy consumption of 1,200 m3 for gas and 2,900 kWh for electricity to pay an adjusted price.
A price cap of a maximum of € 1.45 per m3 of gas and € 0.40 per kWh of electricity is envisaged. These amounts include taxes. The maximum energy rate for gas and electricity at the determined consumption is called the energy price cap.
All suppliers are obliged to apply the price cap. The discount that an average household receives, surrounded by uncertainties, is € 2.500 on an annual basis. The rates of the energy price cap only apply if the rates in your energy contract are higher. You pay your contractual rate for everything you use in excess of 1.200 m3 gas and 2.900 KWh electricity. The price cap also applies to homes that have already switched off gas and only use electricity.
Although the energy price cap will take effect on January 1st, 2023, the cabinet wants the energy supplier to apply lower monthly provisional amounts on November 1st 2022. To make this possible, an extra discount of € 190 per month per contractor has been provided in the months of November and December 2022. This discount has been granted by the energy supplier via the energy bill. When you have received the energy compensation on your account and how exactly it is settled, depends on your energy supplier. They most probably sent you an email message about it.
How are the consumption cap and the price cap determined?
With an average consumption of 1.200 m3 of gas and 2.900 kWh of electricity, approximately 50% of households will fall completely below the price cap, based on statistics from 2021. When households save 10% of energy, approximately 60% of households will benefit from the price cap.
There is an indication of how much energy you can use per month to stay within the price cap. (use an translation app to read the information)
Why is there a higher discount for gas than for electricity?
In the past year, the price of gas has risen faster than the price of electricity. Gas is also the largest part of the energy bill for many households. On average, the gas price has hit households harder than the increased electricity price.
How does the price cap work together with block heating, block electricity or district heating?
If you are connected to district heating, you are also eligible for the price cap. For heat, a price cap of € 47.39 per gigajoule (GJ) will apply in 2023. The consumption cap for heat is also derived from the limit for gas (1200 m3). The ceiling limit for heat consumption is set at approximately 37 GJ.
According to the cabinet, it is more complicated for households that use block heating. It is not feasible to allow these households to benefit from the energy price cap. This also applies to the group of households that have a single power connection, also known as block electricity. The cabinet wants to accommodate households with block heating and households with block electricity in a different way. The owners association (VVE) can use a special form to apply for a flat-rate subsidy, a fixed amount per apartment, from the Tax Authorities. The amount of the compensation is still unknown. The cabinet will investigate whether VvEs that still have a permanent contract, with a rate that is lower than the price cap, can be exempted. These households would also not be able to make use of the energy price cap. Block heating, etc. is most of the time charged directly to the landlord. So in that case the landlord is your linking pin.
When does the price cap take effect?
The energy price cap will come into effect on 1 January 2023. From November 1, 2022, the monthly advance amounts have already been reduced as a result of the extra discount of € 190 per month.
What action do I have to take?
Every contractor has to take action on the 1st of January 2023 or in the first week of January 2023 by checking their email. Did you receive a message of your utility supplier? Read it carefully and follow up what they are asking for. It’s important that the meter readings of the beginning of January will be put in the system of the utility suppliers. If you have smart meters, the meter readings will be read from a distance directly by the utility company. If you have a dumb meter, aka a ‘conventional meter’, your energy supplier will probably soon ask you to provide your meter reading. Don’t they ask for it in the beginning of January 2023, make sure you upload your readings in their system via your online account or give them a call to check if they have your figures. Look on this webpage about utilities how your meters look like. Only the figures left of the comma (the black area) have to be given.
The suppliers want to know your energy consumption until 1 January so that they can calculate which part of your consumption falls under the price cap for energy. The price cap guarantees relatively low prices for gas and energy consumption that remain below a consumption limit.
In practice the effect of the price cap is more difficult.
What if you don’t pass on your meter reading?
If you do not report your meter reading on the 1st January 2023, or do not report it on time, your energy company will still estimate your consumption, which may have a negative impact on your rates.
We can imagine you still have other questions related to this subject. Call your provider and discuss with them!