Gas price continues to decline in the European wholesale market. Today it is about 53 euros per megawatt hour. Two weeks ago it was 65 euros and a month ago it was 82 euros. And even before that, the price of gas, which exceeded 300 euros in August, had fallen steadily.
Because of this low price, energy company Eneco is significantly reducing tariffs for a group of customers from March 1. These amount to 1.83 euros per cubic meter of gas and 0.46 euros per megawatt-hour of electricity. Customers pay these tariffs only for their consumption exceeding the ceiling price.
closer to the price ceiling
These price ceilings are €1.45 and €0.40, so Eneco’s March prices are much closer to this limit. Because the tariffs are even higher for customers who receive new tariffs on 1 February: 2.41 euros for gas and 0.63 euros for electricity. One-third of Eneco customers receive a new tariff each month and this tariff remains the same for three months.
Other energy companies are also expected to significantly reduce their tariffs in the near future. Two other big companies, Vattenfall and Essent, adjusted their tariffs on January 1 and won’t do so again until April 1. At Budget Energie, the country’s fourth largest energy company, new customers have been paying tariffs even slightly below the upper price limit.
Lower government costs
Falling energy prices are not just good news for consumers. If prices remain low for the rest of the year, the government will spend much less on the price ceiling than previously thought. Because it pays the difference between the price asked by energy companies and the maximum price. The smaller this difference, the less the government loses.
In October, the price ceiling was expected to cost the government more than $23 billion at energy prices at the time. At the beginning of January, the Central Planning Office calculated a cost of “only” 4.7 billion, based on the gas price at the time. Now that the price of gas has dropped even further, this could drop as well. Last week, the government reported that energy companies had requested a ceiling price advance of about $900 million for January.
Source: NOS
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
