Germany could pay December bill for gas customers to help with rising costs

The Local
The Local - [email protected] • 10 Oct, 2022 Updated Mon 10 Oct 2022 09:34 CEST
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A woman turns up the temperature on a radiator in Germany. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

A commission set up to decide how Germany's gas price cap to relieve consumers of soaring prices will work has proposed a phased model that includes covering a monthly payment and capping energy prices.

The government commission of experts thrashed out their proposals on the Gaspreisdeckel (gas price cap) during a marathon 35-hour-discussion over the weekend. 

They are proposing a two-stage solution to provide relief for gas customers in Germany struggling with rocketing prices following Russia's invasion of Ukraine, reported German media site Spiegel on Monday. 

The plans say the government should offer a one-off payment in the amount of a monthly bill this year, while subsidised prices are planned for the coming year for private customers and small and medium-sized businesses. 

According to the commission, the state would take over "the respective down payment" of all gas and district heating customers in a first step this December. 

Utility firms would waive the collection of the billing payment and be reimbursed that amount by the federal government by December 1st, under the proposals from the Expert Commission on Gas and Heat.

READ ALSO: Gas bills in Germany will remain high despite price cap, warns economist

The experts said the aim is to "partially compensate" for the high billing payments expected in January and February 2023. It means the government would practically take over the contractual obligations from customers' gas contracts for one month.

In the second stage, a so-called compensation model would be introduced starting in March. Under it, part of a gas bill would be paid at a subsidised price, with the rest paid at the higher gas price.

The commission said on Monday that it would propose a fixed price of 12 cents per kilowatt-hour for residential and commercial customers, with 80 percent of gas consumption to be subsidised. The remaining 20 percent would then have to be paid according to the market price.

There are also plans for an additional hardship fund for poorer households. 

For industry, a quota of 70 percent of kilowatt hours at a fixed price of 7 cents per kilowatt-hour is planned from January.

The package for residential, commercial and industrial gas customers would apply until spring 2024. 

The gas price cap is a central element of the German government's latest energy crisis package worth €200 billion. However, the EU has raised concerns about Germany going it alone with the cap. 

READ ALSO: Germany to fast-track disputed €200 billion energy fund

Meanwhile, some commission members are concerned that there could be large windfall profits for distribution companies in compensating for the capped kilowatt hours. And in the case of aid to industry, there could be problems with EU state aid law, the commission said. The government would have to be mindful of these two points, experts urged.

The 21-member gas commission has met virtually three times in the past two weeks. This weekend, members, including representatives from industry, economics, consumer protection groups and unions, met at the Federal Ministry of Economics.

The proposals were presented to Chancellor Olaf Scholz on Monday morning.

"After about 35 hours of deliberations, the Expert Commission on Gas and Heat, appointed by the German government on September 23rd, 2022, successfully concluded its closed meeting," a spokeswoman for Minister Robert Habeck (Greens), who had appointed the commission, announced in the early hours of Monday.

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