In a move to protect the citizens from the full blast of higher energy prices, the Dutch government intent to subsidize partially these prices, starting with the 1st January 2023. For a limited period, they say, but obviously this energy crisis will be longer than that, so we shall see how long the protection will be applied.
Certain thing is, the major energy providers in the NL already updated their prices, and these are way above the subsidized limit. The difference will be paid by the government and that implies a lot of billions of euros (an estimated €23.5 billion), that the Dutch government doesn't actually have. Well, they can be printed by ECB as usual, or even worse, produced by more taxation.
Even with the subsidized cap, once you cross the limit of a certain amount of kWh or cubic meters of gas, you'll have to pay the full price yourself. That will become quite funny (in a sad way) for a lot of families next year, especially by the end of it. If the government moves downs these limits over the year, that reality might kick even earlier.
MPs have the impression that this cap is better than no cap at all. It's like you're saying, the price control of any product is better than the free price (given by the market - supply and demand sort of thing). Which is completely bollocks. Price controls exists in various degrees in different countries (or they've been tried), but with disastrous consequences.
Earlier this week it emerged that the price cap, which will run throughout 2023, will be recalculated during the year and that not all households will benefit fully.
The government price interventions will, in some cases actually raise the prices, or in another cases, it will lead to lack of that product or services (usually in parallel with a prolific black market). In our case, the prices went up way above the limit.
Going even more down the road of the populist ideas, the true voice of socialism can be heard:
Socialist party MP Renske Leijten said she would rather the government nationalised energy firms. ‘Helping poor people by letting companies make large profits is not something we would want to sign up for,’ she said.
As usual, the true government help would be no help at all, but in this case they need someone to blame. And they will not blame the European Commission decisions to cut off the cheap Russian energy supply with no alternative at hand. No, just the greedy companies.
Funny enough, Germany started already nationalizing companies. Like Uniper.
The right-wing Liberal VVD also said the ruling is too generous to energy firms and called for a reduction in their profit margins.
Ruling too generous to energy firms?! But we though the ruling is meant to help "poor people"!
Also, how do you intend to reduce the profit for a private company?
Jetten told MPs that the consumers’ authority ACM and government accountants would monitor the application of the price ceiling carefully and would intervene if the energy firms appeared to be making excessive profits.
How do you define excessive profits? Who decides that and based on what?
No matter how we look at this situation, the cap is nothing more that a populist idea, coming from a government incapable to see the forest for trees. And once the next year unfolds, the cap will eventually be proved as an idea who does more damage than it suppose to fix. And which will require even more protectionism.
