In this article, you will get all information regarding German Gas And Electricity Price Brakes Due To Come Into Effect From January Economy – S Chronicles

11.22.2022 17:34 (act. 11.22.2022 17:34)

Consumers must be better able to cope with rising heating costs.

Consumers must be better able to cope with rising heating costs. ©APA/dpa

Families in Germany should be relieved from January onwards with the brake on gas prices. Although the gas and district heating tariff ceiling should be implemented for the first time from March, the months of February and January would be counted retrospectively, according to the bills on the electricity and gas tariff brake, presented on Tuesday.

As planned, 80% of prior year consumption will be capped at twelve cents per kilowatt-hour for homes and businesses. For electricity, the limit should be 40 cents. The same applies to large-scale industry. The bill now stipulates that companies can pay dividends and bonuses despite this state aid. The Federation of German Industries (BDI) praised the project as important for ensuring the existence of large industrial areas.

In the wake of the Russian attack on Ukraine, gas prices and, as a result, electricity prices skyrocketed. Thus, in December, a one-off discount on the price of gas of around one twelfth of the annual bill for households was decided upon. Criticism was sparked by the fact that the next level of relief was initially not going to take effect until March. Economy Minister Robert Habeck (Greens) then justified the change as follows: “This is simply because we want the easing effect to be noticeable and clear in these winter months.”

The Federation of Consumer Organizations hailed this as an important improvement: “In view of extreme price increases, consumers need relief as soon as possible,” said Ramona Pop, a board member. The German Tenants Association (DMB) agreed, but warned that tenants are dependent on landlord cooperation if the aid retrospectively takes effect in March: “It remains unclear whether landlords should implement these regulations immediately”.

The project, which could cost more than €50 billion for the gas alone, will be funded by the so-called €200 billion defense shield. The price brakes must be applied by April 2024. The bills must pass the cabinet this week so that they can pass the Bundestag and Bundesrat in December.

According to a government sample calculation, a family of four with an apartment of 100 square meters can save more than 1,000 euros a year on electricity and gas. This should be implemented by suppliers, reducing monthly deductions accordingly. A consumption of more than 80% of the previous year is reflected in the currently high prices. But those who consume less than 80% should also benefit. This creates an incentive to continue saving gas.

For the approximately 25,000 large consumers of the industry, a price of 7 cents for 70 percent of gas consumption and 13 cents for electricity will also be applied from January. It was disputed whether companies should continue to pay dividends or bonuses to managers despite this billion-dollar bailout. According to the bill, however, this should only be prohibited in the case of direct capital assistance. However, there are many voices in the traffic light coalition calling for a ban on dividends. It is therefore likely that the issue will be discussed again when the law is dealt with in Parliament in December.

In addition, the bill regulates that the diversion of so-called incidental profits of electricity producers must now be applied retrospectively from September. The first cornerstones had already been known for two weeks. The fee will apply retrospectively from September 1, 2022. “As of this date at the latest, plant operators could no longer rely on the ability to maintain their surplus revenue,” the bill reads. Skimming should initially last until June, but may be extended until the end of 2024. Producers may retain a certain basic revenue plus a surcharge, depending on the type of generation, such as wind, solar or lignite, but they must also yield 90% of the recipe.

The Federal Renewable Energy Association (BEE) sharply criticized the bill: “Germany is progressively phasing out fossil fuels while at the same time pulling the rug out from under the feet of future renewable carriers. The federal government is willingly and unnecessarily risking the progress made so far in the energy transition.” , said the president of BEE, Simone Peter. Retrospective charging is also unconstitutional. The Stadtwerke-Verband (VKU) spoke of a mistake and a threat to the investment climate.

The EU Commission, however, criticized that the measures planned by the federal government in the energy crisis were not sufficiently targeted. On Tuesday, she presented recommendations to euro countries on how to plan their spending in 2023. In particular, states must ensure that support measures for citizens are temporary and aimed at easing families and small businesses, which are the most affected by high energy costs and not all equally. In Germany, this is only partially the case.

According to the Commission, targeted measures to combat high energy prices in Germany will account for 0.3% of gross domestic product (GDP) this year. Non-targeted measures, on the other hand, account for 0.8% of GDP. Next year, the difference is estimated to be even greater: non-targeted measures represent 0.7 percent of GDP against targeted measures with more than 0.1 percent of GDP. Overall, Germany will see a lot of growth in spending in 2023 despite expected high inflation, he said.

Furthermore, the EU Commission spoke of imbalances in the German economy that would have to be checked – such as rising house prices and falling current account surplus. The EU Commission has also announced tests for 16 other EU countries. The Brussels authority’s recommendations will now be discussed by EU states.

German Gas And Electricity Price Brakes Due To Come Into Effect From January Economy – S Chronicles

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