Energy company Essent will also raise rates from January 1

• Rob Coster

  Economics journalist

While energy purchase prices have fallen sharply in recent months, energy company rates continue to rise. This is evident, among other things, from the increase in variable rates that Essent announces this afternoon.

With around two million customers, Essent is the largest energy company in the Netherlands. Previously, Vattenfall announced that prices will increase further next year.

“Since international gas and electricity prices remain steadily higher, Essent too cannot avoid raising tariffs,” writes chairman of the board Resi Becker in a press release. The company specifies that the gas and electricity for the coming months have already been purchased much earlier and that therefore the recent price reductions on the purchasing market have not yet been taken into account.

As a rule, Essent changes floating rates twice a year, on 1 January and 1 July. The now announced price increase that will take effect on January 1 next year will only apply for three months. Essent hopes to be able to lower the tariffs again on April 1 due to lower purchase prices on the international gas market in recent months, but a further increase cannot be ruled out.

Despite Essent’s higher tariffs, customers are paying even less due to the price cap the government is introducing throughout 2023. This means that the government guarantees a cap price for the first 2,900 kilowatt hours (kWh) of electricity and the first 1,200 cubic meters of gas (m3), taxes included. Essent thinks the price capless monthly rate would increase by 175 euros for people using this type of energy.

According to the energy company, this is the result of higher purchase prices and an increase in the energy tax. The government canceled the reduction in the VAT rate, which will go from 9 to 21 percent on January 1st. The so-called tax credit, the refund of the energy tax, will also be reduced from 790 to 560 euros per year. With these measures, the government partially finances the introduction of the price cap.

This price cap ensures that despite higher energy prices and taxes, people who stay below the cap will still get a lower monthly rate next year. Essent believes that 85% of customers will benefit from the price cap and will pay tens of euros less per month. For example, customers who benefit from the maximum cap pay about 75 euros less per month.

To ensure that the subsidy allocated by the government reaches 100% of households, the government wants to maximize the profit margins of energy companies. Depending on gas and electricity prices, this subsidy can amount to tens of billions of euros.

Climate and Energy Minister Jetten is now seeking advice on how much profit energy companies can make next year. The energy companies themselves believe that it will be possible to determine what a reasonable profit margin will be for 2023 only after the end.