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Good news for German households as energy prices set to drop

Paul Krantz
Paul Krantz - [email protected]
Good news for German households as energy prices set to drop
A photo shows a digital heating thermostat of a gas heating in a flat in Dortmund, western Germany, on October 4, 2022. (Photo by Ina FASSBENDER / AFP)

Residents in Germany are set to benefit with energy suppliers announcing price reductions for electricity and gas for December and January.

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Millions of households are expected to benefit, bringing a bit of financial relief for many who have experienced increasing energy costs in recent years.

According to a recent report by Verivox, Germany's largest independent consumer portal for energy, a number of electricity and gas providers in Germany will be cutting prices in the next two months, which will impact energy bills for some residential consumers.

"The turn of the year is regularly a time when energy suppliers adjust their electricity or gas prices," explained a spokesperson for the municipal utilities association VKU (Verband kommunaler Unternehmen) in Berlin. "The current price reductions are mainly based on the lower purchase prices compared to last autumn and winter."

Until 2022, more than half of Germany's gas supply came from Russia. Most of it came through the Nord Stream pipeline, which was hit by sabotage in September last year.

Germany has since launched an ambitious strategy to reduce energy demands and source gas from other suppliers, such as Norway, the US and Saudi Arabia. The plan seems to have worked, with Germany's gas reserves currently full.

With gas tanks full, and inflation down from last year, many energy companies have been able to secure their supplies at cheaper rates, allowing them to lower their prices for customers.

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Electricity price cuts averaging 12 percent

According to Verivox, 83 electricity suppliers have announced electricity price reductions so far, averaging 12 percent. However, five suppliers have also announced minor increases. 

Verivox expects this to result in a future average electricity price of about 46 cents per kilowatt hour. In comparison, the electricity price cap, which the German government wants to remain in effect until the end of April, caps the price at 40 cents. 

There are 4.7 million households in areas affected by electricity price cuts, with 1.1 million households expected to pay an average of 12 percent less for electricity, and 900,000 households affected by price increases. 

Almost 100 basic gas suppliers to reduce prices

Natural gas price reductions have also been announced for December and January, by 15 percent on average. According to Verivox, 9.5 million households may be affected. About half of these homes have gas heating systems.

Verivox estimates the future average gas price to be 14 cents per kilowatt hour. This price is also above the current price cap, which is set at 12 cents.

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