Energy prices in the Netherlands

With a fixed energy contract, the prices for electricity and/or gas remain fixed for a set period. This period can be for six months, one year, three years, or five years. With this type of contract, you have price stability for an extended period for electricity and/or gas. If prices suddenly decrease, you won’t benefit from it, but if prices rise, your bill won’t go up.

With a variable energy contract, prices change on a monthly or semi-annual basis. The frequency of price changes per year is specified in your energy contract. You always pay a fixed monthly rate, so you know in advance what you need to pay to your energy supplier each month. With this energy contract, you can switch whenever you want, and there’s no risk of a termination penalty when changing your energy provider.

Dynamic energy prices are tied to the spot market (also known as the “day ahead market”). This means that electricity prices vary hourly, and gas prices vary daily. You will know the prices for the next day around 3:00 PM each day. You do not pay a fixed monthly rate; the rate changes every month based on your consumption and the energy prices that month. With this contract, you immediately benefit from a lower rate when prices drop, but you also face a higher rate when prices rise.

These are the expenses you pay for electricity and gas. Supply costs consist of two parts:

1. Consumption costs, which you pay for the amount of gas and electricity you use. Your energy supplier determines the rate for this energy usage.

2. Fixed supply costs refer to the fixed fees you pay for the connection to the water supply or the electricity grid. You pay these costs regardless of your energy consumption. Energy providers have the discretion to set the level of fixed supply costs. Some suppliers may have low fixed fees and compensate with slightly higher energy prices or vice versa.

Network costs consist of four components:

1. Annual connection fees are paid to maintain and upkeep your connection.

2. Fixed transport fee covers the costs of transporting your energy. This is a fixed rate independent of your consumption.

3. Capacity-dependent transport rate is a fixed yearly amount for energy transport costs. Network operators use this money for the construction and maintenance of energy grids.

4. Meter rental: you pay meter rental (also known as meter rate) for the use, installation, and maintenance of the meter. Electric and gas meters are owned by the network operator.

There are three components of taxes on energy:

1. Energy tax: The government aims to encourage energy efficiency, which is why it imposes energy tax on energy consumption. You pay this tax on every kWh (electricity) or m3 (gas) you consume.

2. Energy tax reduction: The government considers a portion of the energy you consume as a basic necessity. Therefore, you do not have to pay energy tax on that portion. A tax reduction applies per electricity connection.

3. VAT: stands for value added tax. You pay 21 percent VAT on nearly everything you purchase or consume, including energy. You are charged VAT on the entire energy bill, including energy tax. Your energy supplier remits the VAT you pay to the tax authorities.