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ENERGY

When will Germany clamp down on electricity prices for consumers?

Germany could be set to introduce an electricity price cap from January next year - but questions remain on how quickly a similar cap on gas prices can be implemented.

A man works on his laptop at home.
A man works on his laptop at home. Photo: picture alliance/dpa | Sina Schuldt

“The relief for electricity prices must begin in January at the latest,” Economics Minister Robert Habeck (Greens) told Handelsblatt on Monday.

“That is what we are aiming for.”

Habeck is the latest political heavyweight to air his support for an early start to the electricity price brake, with the leaders of the federal states and Finance Minister Christian Lindner (FDP) also calling for relief to start next year.

On the advice of an expert panel, the traffic-light coalition had originally planned to bring in a cap on gas prices from March 2023. This would grant households a certain allowance of subsidised gas – equivalent to 80 percent of the previous year’s usage – which would be capped at 12 cents per kilowatt hour of energy.  

To support the economy over winter, the government is also planning to cover the December gas bill for households and small- to medium-sized businesses.

Electricity prices, which are heavily affected by price hikes on the gas market, will also be subsidised by the state. This now looks set to come in two months earlier than the cap on gas prices. 

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But critics of the plans – including the opposition CDU – say support with gas bills as well as electricity bills should be extended through the coldest winter months of January and February. 

Speaking on Bericht aus Berlin on Monday, Lindner said the government was “working at full speed to curb electricity and gas prices as quickly as possible”. In principle, he said, the electricity and gas price brakes should take effect as soon as possible so that citizens and businesses are relieved.

However, ministers are still unsure whether bringing the gas price cap forward to January is “technically possible”, Lindner added. 

In order to implement the planned gas price cap, suppliers will need to calculate 80 percent of a household’s previous energy usage and charge the difference between the market prices and the capped price to the state. 

According to chairman of Mining, Chemical and Energy Industries Union Michael Vassiliadis, suppliers are likely to implement this alternative payment structure at different speeds. This could lead to different regions or households receiving relief at different times if the gas price brake is brought forward, he told Deutschlandfunk. 

‘Relief must come earlier’

At a meeting of federal and state leaders on Friday, North Rhine-Westphalia’s state premier Hendrik Wüst (CDU) was among the voices urging the government to provide more energy relief in January and February.

“Private households and businesses need uninterrupted support,” Wüst told DPA. “It would be wrong for the traffic light government to stall over the winter.” 

READ ALSO: German state premier calls for gas price cap to start in January

His comments were echoed by Jens Spahn, the vice chairman of the CDU/CSU parliamentary group. 

“For bakeries, too, for craft trades, there needs to be structural relief much earlier, in January, February, March,” Spahn told ARD.

He said the government could offer lump sums to low-income households and businesses at risk of insolvency if the energy price break couldn’t be brought in sooner.

Over the weekend, Chancellor Olaf Scholz (SPD) said he wanted to explore an earlier start date for the gas price brake on January 1st and discuss this with the energy suppliers.

The government could not decide this and then the utilities say, “but it won’t work, we won’t do it”, Scholz said on Saturday. “This will only succeed in a great closing of ranks in Germany. And that’s what we’re organising right now – to discuss the questions of how to do it.”

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ENERGY

Norway and Germany seek Nato-led cooperation for key undersea structures

Germany and Norway want to start a NATO-led alliance to protect critical underwater infrastructure, their leaders said on Wednesday, weeks after explosions hit two key gas pipelines in the fallout from the war in Ukraine.

Norway and Germany seek Nato-led cooperation for key undersea structures

 “We are in the process of asking the NATO Secretary General to set up a coordination office for the protection of underwater infrastructure,” German Chancellor Olaf Scholz told a press conference in Berlin.

“We take the protection of our critical infrastructure very seriously and nobody should believe that attacks will remain without consequences,” he said.

Norwegian Prime Minister Jonas Gahr Store said the alliance would be “an informal initiative to exchange between civilian and also military actors” with NATO providing “a centre, a coordination point”.

Underwater cables and pipelines were “arteries of the modern economy” and it was necessary to create “a coordinated joint effort to ensure security for this infrastructure”, he said.

Scholz said he and Store would propose the plan to NATO Secretary General Jens Stoltenberg, who is due in Berlin for a security conference. The Nord Stream 1 and 2 gas pipelines off the Danish island of Bornholm were targeted by two huge explosions at the end of September.

The pipelines, which connect Russia to Germany, had been at the centre of geopolitical tensions as Moscow cut gas supplies to Europe in suspected
retaliation to Western sanctions over the invasion of Ukraine.

Although they were not in operation when the leaks occurred, they both still contained gas which spewed up through the water and into the atmosphere.

Russia and Western countries, particularly the United States, have traded bitter barbs over who is responsible for the blasts.

Several European countries have since taken steps to increase security around critical infrastructure. 

The G7 interior ministers warned earlier this month at a meeting in Germany that the Nord Stream explosions had highlighted “the need to better protect our critical infrastructure”.

Norway has become Europe’s main gas supplier in the wake of the war in Ukraine, taking the place of Russia.

The Scandinavian country has a vast network of pipelines, stretching for almost 9,000 kilometres, linking it to the continent, which experts have said are at risk of sabotage.

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