ACM: fair competition is no guarantee for affordable energy for everyone

The Netherlands Authority for Consumers and Markets (ACM) enforces compliance with the rules and regulations on the energy market among businesses. The energy market is a free market where supply and demand determine prices. For its energy supply, the Netherlands is still largely dependent on the import of natural gas. That is why it cannot be ruled out that a sudden supply shock will result in very high prices again. That will particularly affect vulnerable households. ACM makes this argument in its paper ‘Policy options for tackling energy poverty in vulnerable households’.

In its paper, ACM outlines three ways in which the government can make sure that vulnerable consumers are protected against too high energy prices: general purchasing-power policy, introducing a social rate, and making homes more sustainable.

General purchasing-power policy means that the government uses taxes and subsidies to ensure that the disposable incomes of households are high enough to pay for basic needs. A social rate means that the government mandates suppliers to supply energy to a defined group of vulnerable consumers for a maximum rate. In return, suppliers are compensated by the government. By promoting projects to make homes more sustainable, the government seeks to reduce energy consumption, which also results in lower energy bills. Making homes more sustainable helps reduce energy consumption, but it is not a real alternative to general purchasing-power policy or introducing a social rate. The insulation of homes still takes up a lot of time, and, even after making homes more sustainable, energy bills can still be high.