Cabinet: especially lower middle incomes benefit from price ceilings

The price ceiling for energy rates helps all households with high variable rates, writes Prime Minister Rutte to the House of Representatives. His letter arrived just before the start of the second day of General Reflections.

Yesterday, many questions were asked in the House about the ceiling. According to Rutte, lower middle incomes mainly benefit from the measure, because they consume less energy on average than higher income groups. โ€œIn addition, for lower middle incomes, a larger proportion of monthly spending consists of energy costs.โ€

The precise design of the price ceiling has yet to be worked out, emphasizes Rutte, also on behalf of ministers Kaag and Jetten. Therefore, not all questions about this can be answered. According to Rutte, the cabinet likes to talk to the House about dilemmas and risks and the further elaboration of the intentions.

There will also be further consultation with the energy suppliers. According to the cabinet, the desired speed does impose significant restrictions on the โ€œdegree of focusโ€ of the measure: because it has to be fast, it cannot be exactly everywhere.

Average consumption in normal times

Rutte further writes that the cabinet has opted for a โ€œvolume limitโ€ of 1200 m3 of gas and 2400 kWh of electricity, because that is the limit โ€œaround average consumption in normal timesโ€. According to the cabinet, there must also remain a โ€œsavings incentiveโ€, because this is important for security of supply and because that is also a condition of the EU.

Based on last years figures, around 50 percent of households would fall completely below the price ceiling. According to the cabinet, if households save 10 percent, that figure could reach around 60 percent of households.

The price caps can still be reduced if the prices for gas or electricity are low.

Heat pumps

The cabinet also discusses the consequences of the measures for heat pumps. โ€œThe signs that a reduced gas rate and electricity rate will worsen the business case for owners of (..) heat pumps in the coming year have also reached the cabinet,โ€ writes the Prime Minister. But he also insists that the price ceiling only applies until the end of next year, while the โ€œinvestment horizon for a heat pump includes roughly 15 to 20 yearsโ€.

According to the cabinet, with the price ceiling, a heat pump remains a good investment. Rutte adds that the price ceiling is mainly set up to protect households that most need purchasing power support. โ€œAnd to date, most of the new heat pumps are being installed in homes with above average gas consumption.โ€