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ENERGY

Germany slashes electricity levy as energy prices surge

The German government will drastically lower a levy on electricity consumption from 2022 to help ease the burden on consumers as Europe battles soaring energy prices, grid operators announced Friday.

An electricity meter shows energy consumption in a German household.
An electricity meter shows energy consumption in a German household. Photo: picture alliance/dpa | Hauke-Christian Dittrich

The Renewable Energy Act (EEG) surcharge, used to fund the expansion of solar and wind plants, will fall by more than 40 percent to 3.723 cents per kilowatt hour from January 1st, according to a statement by German grid operators 50Herz Transmission, Amprion, TenneT TSO and TransnetBW.

It is the largest reduction yet since the green levy was introduced in 2000 to help Europe’s top economy transition away from fossil fuels towards cleaner energy sources.

The Local reported on Thursday that the EEG levy slapped on private households was set to fall – but that it may have little impact on energy bills due to rising prices.

Economy Minister Peter Altmaier said recently that the EEG surcharge should be phased out completely over the next few years “to keep power affordable”.

The shortfall will be offset by higher government subsidies, partly thanks to a tax on carbon emissions introduced at the start of 2021.

Germans already have the highest electricity bills in the European Union and as winter approaches, pressure is growing for the government to help mitigate a looming energy price crisis.

READ ALSO: Why German electricity bills are hitting record highs

Gas prices have surged in Europe in recent months as demand has soared with economies emerging from their Covid-induced restrictions. Stocks were also left low after a long, cold winter.

Wholesale natural gas prices, the lead indicator for overall energy prices in Europe, have more than tripled this year. Oil and coal prices have also jumped, fuelling fears over spiking inflation and rocketing energy bills.

EU leaders will discuss the energy issue at a summit next week.

The European Commission has proposed that member states temporarily reduce taxes and levies to help lower energy bills for households and businesses.

In France, the government has pledged to block any further price increases for gas and electricity until April.

READ ALSO: How households in Germany can tackle rising energy costs

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ENERGY

German households to receive relief for gas costs ‘starting in January’

To help German residents with skyrocketing energy costs, the government is planning to provide relief starting in January, according to draft legislation.

German households to receive relief for gas costs 'starting in January'

Through the gas price cap, the so-called Gaspreisbremse, both German residents and companies will receive retrospective relief for their gas costs starting in January 2023, according to the draft. 

Previously the relief payments were set to stretch between March 2023 and spring 2024, with 25,000 larger businesses, as well as almost 2,000 hospitals and schools to receive the help starting in January. 

READ ALSO: How much could households save under Germany’s new price cap?

The German government is reacting to the sharp rise in energy prices with energy price brakes worth billions and wants to soften the blow on both private households and companies. 

Germany will also be divvying out a one-off energy relief payment in December.

READ ALSO: When will people in Germany get their December gas bill payment?

How much will households and businesses receive?

Under the gas price cap, households and small and medium-sized enterprises are to receive a guaranteed gas gross price of 12 cents per kilowatt hour for 80 percent of their current consumption. For the remaining 20 percent of consumption, the contract price is set to apply.

For district heating, the guaranteed gross price is to be capped at 9.5 cents. 

Starting in January, a gas price brake is also planned for industry. These large consumers are to receive a guaranteed price of 7 cents per kilowatt hour net for 70 percent of their previous consumption volume.

The largest part of the energy price brake is to be financed by a “defence umbrella”, or special reserve, totalling up to €200 billion. The government is still taking on new debt in order to finance the energy caps. 

Russia’s war against Ukraine has increasingly aggravated the situation on the energy markets in Germany and Europe in the course of 2022, the draft states. 

In particular, the recent large price increases for natural gas and heat represent a “considerable, in some cases existence-threatening burden for residents and companies in Germany,” it continued. “They are an enormous socio-political and economic challenge.”

Vocabulary

relief – (die) Entlastung

Natural gas – (das) Erdgas

Consumption – (der) Verbrauch

cushion/soften a blow – abfedern

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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