Municipalities with an energy contract with the former Gazprom Energy have until the end of March to switch to another provider. Climate and Energy Minister Rob Jetten (D66) is extending the period during which municipalities must look for another provider by a further three months, he writes to the House of Representatives.

Jetten also granted the municipalities a three-month deadline in September and promised at the time to ask the EU Commission whether the contracts violate European sanctions rules. Since the Commission has not yet given an answer, the minister is extending the deadline. Municipalities that have already been forced to convert can expect compensation. The minister is in talks with the municipalities about exactly what the compensation should look like.

In a letter (link) to the House of Representatives, Jetten writes that he does not yet have all the information to “finally comment” on the sanctions. The extension gives the municipalities “clarity with regard to the coming winter”. More than three hundred municipalities, water associations and (semi-)public institutions such as schools have now contacted the ministry to apply for a temporary exemption from the forced transfer.

They all had energy contracts earlier this year with Gazprom Energy, the Dutch subsidiary of Russia’s state-owned gas company. In early March, following the invasion of Ukraine, local residents called on their local authorities to cancel those contracts to prevent the parent company’s gas revenues from filling Russia’s war coffers.

However, media reports and the jury’s own research showed that terminating the contracts would be counterproductive. Municipalities that had terminated their contract had to buy gas on the European market again. The gas mixture available there is still partly Russian. And because the price of gas was five, ten or even fifteen times higher all year round, the switch actually brought additional revenue for Russia.

reluctantly

Nevertheless, at the end of April, Minister Jetten obliged the municipalities and water associations to convert within six months. It was “undesirable” if the Netherlands “contributed to the Russian treasury in this way,” he said at the time. The minister wrote to the House that the fifth European sanctions package that has just been passed will be obliged to do so.

The order came at a crucial time. A few weeks earlier, Germany had taken over Gazprom’s European headquarters. The German government replaced the CEO and part of the staff. In addition, Germany guaranteed that income from the European branch, which also includes the Dutch branch, will no longer flow to Russia. The federal government has renamed Gazprom’s European subsidiaries SEFE (Securing Energy For Europe) and called on the company’s customers to comply with the contracts.

In the months that followed, dozens of municipalities followed Jetten’s orders, albeit regularly with clenched teeth. The Municipality of Utrecht, whose SEFE contract ran until 2024, was forced to allocate an additional 11 million euros to switch to a new supplier while gas prices were at their peak. Despite this, “we still get Russian gas delivered,” writes the municipality, because it “is simply part of the Dutch gas mix.”

compensation

Once news hour In two broadcasts, attention was drawn to the difficult situation in the municipalities, and a majority in the House of Representatives called Jetten back. The House of Representatives asked him to reconsider his mandate. He complied with this at the beginning of September by pushing back the deadline from October 10th to December 31st by three months. He also promised to raise the matter in Brussels. This reply is taking longer than expected, so the deadline is extended.

The minister is now also meeting with the municipalities that have already switched. In either case, they will receive “compensation” for the higher price they paid between October 10th (the original deadline) and December 31st. Jetten is now meeting with the parties, for whom the SEFE contract also expired in 2023, to discuss further compensation.