According to the Central Planning Bureau, the costs of the price cap for energy will rise to 13.1 billion euros if the Netherlands faces a harsh winter. If the mercury remains consistently low this winter, there are three scenarios to consider.
At the outset, the CPB takes into account the so-called baseline scenario. This scenario is based on the current gas price, according to energy expert Ronald de Zoete. “And that families are not penalized too severely in terms of purchasing power. This means that we could lose about 0.2% of purchasing power in a normal scenario.’
According to De Zoete, the ‘normal’ scenario refers to the maximum price. ‘This will cost us €8 billion, and the average citizen will not have monthly costs of €525, but rather €250. This has already been achieved.’
Other scenarios have also been devised, De Zoete believes. “If we look at the more extreme variants, the costs can go up for the government or for the citizen.”
Low gas price?
A scenario for a mild winter was also worked out. ‘Then they assume a low gas price, and so far it’s been relatively mild,’ says De Zoete. ‘This is good news for the government, because then they have to compensate less.’ According to De Zoete, this is due to the fact that the price of gas is therefore lower than the ceiling, «and citizens can pay less because they have to spend less on energy costs. So that would be good news.’
It’s hard to say how much cheaper a price cap will cost at low gas prices, according to De Zoete. “This has to be considered pro rata, but it could just be that ten or twenty percent of the price is reduced,” he says. “However, this does not immediately mean that the 8 billion will be worth twenty percent less. You have to tear down the ceiling first before it benefits the citizens and the government.’ But, he points out, the government always benefits from a lower gas price. “Every euro per megawatt hour saves them money.”
13.1 billion euros
But where a scenario for a good situation has been devised, there has also been a scenario for the worst case scenario. As a harsh winter sets in with a high gas price, a scenario could arise where the price cap will cost €13.1 billion. Even if it doesn’t seem like it, according to De Zoete it can happen. “This is not just because the government has to compensate more,” he says. ‘But also that natural gas stocks need to be replenished, because more has been used than expected. And this pushes prices further up.’
He therefore believes that there is greater demand with a higher gas price, and households that consume more than 200 cubic meters of gas and 2900 kW of electricity will then have to pay the market price for the excess. “And that will do a lot of harm to the citizen.”
More income?
Higher gas prices would also increase Dutch gas revenues, and thus government revenues. De Zoete thinks that with this the Dutch government can also pay a large part of the ceiling. “This will be partly the case and the advantage,” he concludes. ‘But the question is whether it is enough to compensate everyone, because in this scenario they will have to compensate many more families. Not only for the gas ceiling, but also with emergency subsidies, etc. Also, now we’re only talking about consumers, not businesses, so hopefully the high gas price and harsh winter won’t come true.’
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
