CAPTION: German Cabinet agrees plan to soften impact of high energy prices. (picture alliance/dpa/Hauke-Christian Dittrich)
The German government has agreed on a plan to ease the burden of high energy prices on consumers.
The Cabinet agreed to introduce a curb on electricity prices with subsidies worth billions for grid fees. It also passed an ordinance to extend the gas and electricity price cap until the end of April 2024.
The European Commission still has to approve the measures. A spokesman for Economy Minister Robert Habeck said the ministry was in intensive talks with the European Commission to move the procedure forward as quickly as possible.
The gas and electricity price caps have so far been limited in Germany until the end of December 2023. The measures can be extended until April 30, 2024, by a statutory order of the central government in Berlin with the approval of the lower house of parliament, or Bundestag.
According to calculations by the comparison portal Verivox, the average household will hardly benefit from an extension of the energy price cap, because value-added tax (VAT) on gas is due to return to its higher rate again at the turn of the year.
The German Association of Energy and Water Industries (BDEW) and the German Association of Local Public Utilities (VKU) see a real risk that the implementation of the extended energy price cap by municipal utilities and energy suppliers won't happen in time for January 1.
Authorization from the European Commission is still pending, and the Bundestag's approval could take until mid-December, they said. This would leave the utility companies only two weeks over Christmas to adjust billing systems and inform customers.
According to the Ministry of Economic Affairs, the subsidy for the pro-rata financing of transmission grid costs of up to €5.5 billion ($5.8 billion) from the Economic Stabilization Fund is a concrete example. The energy price caps are also financed from this fund.
The subsidy would stabilize the grid fees, which would dampen the electricity price and benefit all consumers, said government spokesman Steffen Hebestreit.
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