Household electric bills ‘billions too much’

Households in Germany pay around €3 billion too much for their electricity each year, according to a market analysis which says industry is benefitting from state aid for the switch to renewables – but domestic customers are being left out.

Household electric bills 'billions too much'
Photo: DPA

Sinking prices at the electricity exchange in Leipzig, where prices are arranged, are passed on to industrial customers but not to households, said Gunnar Harms, an energy expert, in a report commissioned for the Green Party.

Deputy leader of the Green parliamentary party Bärbel Höhn told the Tagesspiegel newspaper this was evidence that the government was pushing through the change in energy generation from nuclear and coal to more renewable sources, “at the expense of consumers.”

And prices are only set to increase this autumn, according to Environment Minister Peter Altmaier, the paper said. Altmaier has warned that the additional burden due to a fixed price being set for 20 years in order to pay for the change to renewable energy, would rise by around five percent next year.

Currently domestic and commercial customers pay a 2.6 cent per kilowatt hour contribution for renewable energy. A further 3.2 cent is levied in taxes.

Industrial customers pay around 10 cent per kilowatt-hour, while domestic customers pay more than 26 cents, said Harms.

A major factor in the difference is that companies with high consumption have been let off a large part, and in some cases, all the renewables subsidy.

An average household which uses 3,500kilowatt hours a year pays €125 a year for renewables, of which €31 is due to the exclusion of industrial customers from paying a share, he said.

The Local/hc

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German government announces fresh relief package for high energy costs

With Russia's invasion in Ukraine exacerbating high energy and petrol prices, Germany is set to introduce a second relief package to limit the impact on consumers.

German government announces fresh relief package for high energy costs

The additional package of measures was announced by Economy and Climate Protection Minister Robert Habeck (Greens) on Sunday.

Speaking to DPA, Habeck said the wave of price increases throughout the energy sector were becoming increasingly difficult for households to bear.

“Extremely high heating costs, extremely high electricity prices, and extremely high fuel prices are putting a strain on households, and the lower the income, the more so,” he said. “The German government will therefore launch another relief package.”

The costs of heating and electricity have hit record highs in the past few months due to post-pandemic supply issues. 

This dramatic rise in prices has already prompted the government to introduce a range of measures to ease the burden on households, including abolishing the Renewable Energy Act (EEG) levy earlier than planned, offering grants to low-income households and increasing the commuter allowance. 

READ ALSO: EXPLAINED: What Germany’s relief package against rising prices means for you

But since Russia invaded neighbouring Ukraine on February 24th, the attack has been driving up energy prices further, Habeck explained.

He added that fears of supply shortages and speculation on the market were currently making the situation worse. 

How will the package work?

When defining the new relief measures, the Economics Ministry will use three criteria, Habeck revealed. 

Firstly, the measures must span all areas of the energy market, including heating costs, electricity and mobility. 

Heating is the area where households are under the most pressure. The ministry estimates that the gas bill for an average family in an unrenovated one-family house will rise by about €2,000 this year. 

Secondly, the package should include measures to help save energy, such as reducing car emissions or replacing gas heating systems.

Thirdly, market-based incentives should be used to ensure that people who use less energy also have lower costs. 

“The government will now put together the entire package quickly and constructively in a working process,” said Habeck.

Fuel subsidy

The three-point plan outlined by the Green Party politician are not the only relief proposals being considered by the government.

According to reports in German daily Bild, Finance Minister Christian Lindner (FPD) is allegedly considering introducing a state fuel subsidy for car drivers.

The amount of the subsidy – which hasn’t yet been defined – would be deducted from a driver’s bill when paying at the petrol station. 

The operator of the petrol station would then have to submit the receipts to the tax authorities later in order to claim the money back. 

Since the start of the war in Ukraine, fuel prices have risen dramatically in Germany: diesel has gone up by around 66 cents per litre, while a litre of E10 has gone up by around 45 cents.

READ ALSO: EXPLAINED: The everyday products getting more expensive in Germany

As well as support for consumers, the government is currently working on a credit assistance programme to assist German companies that have been hit hard by the EU sanctions against Russia.

As reported by Bild on Saturday, bridging aid is also being discussed for companies that can no longer manage the sharp rise in raw material prices.

In addition, an extension of the shorter working hours (Kurzarbeit) scheme beyond June 30th is allegedly being examined, as well as a further increase in the commuter allowance.