Consumer protection alarmed: Increased electricity discounts as part of the energy price brake

The introduction of the energy price brake was an important regulatory measure aimed at controlling electricity prices for consumers and ensuring fair billing. But the latest findings from the Federation of German Consumer Organizations (vzbv) indicate that this initiative has failed in some areas.

Too high discount demands

The energy price brakes should serve to relieve consumers with regard to their energy bills for electricity, gas and heat, but the evaluation of the Federal Association of Consumer Organizations indicates serious concerns.

The evaluation by the vzbv is based on two main data sources: more than 1,600 responses from consumers, which were collected using an online form on the consumer advice center website, as well as feedback from the early warning network (FWN) of the consumer advice centers and the vzbv. This early warning network serves as a qualitative recording and analysis system for conspicuous issues in consumer advice.

One of the most salient problems was that in a slim majority of cases, 53 percent, consumers reported excessive haircut requests. Discounts are prepayments consumers make for their energy bills, and ideally they should reflect actual consumption. The vzbv then asked the energy suppliers to correct incorrectly calculated budget billing plans immediately.

In one case, the vzbv even took legal action against the energy supplier eprimo to stop higher advance payments. The regional court in Frankfurt am Main confirmed vzbv’s application on May 30 and initiated an injunction against eprimo, according to the Federal Association of Consumer Advice Centers.

There were other problems

Another problem identified concerns customers who switched providers at the start of the electricity price brake on March 1, 2023 and did not receive any retrospective relief for January and February due to a legal loophole, the vzbv continues.

The energy price brake in Germany is a regulatory measure to limit energy costs for consumers and companies. From March 1, 2023, fixed price limits for electricity and gas were introduced. The gas price is limited to 12 cents per kilowatt hour, the electricity price to 40 cents. These caps apply to most past consumption and are based on the previous year’s energy consumption. The calculation is based on the annual financial statement available by September 2022 or the latest consumption measurement. The vzbv is pushing to close the existing gap and clarify any ambiguity in the price brake laws to ensure that the planned relief reaches all consumers seamlessly and in full.

Another problem highlighted by vzbv’s analysis concerns annual consumption forecasts. In 27 percent of the cases examined, it was finally found that the annual consumption forecast was not calculated correctly, and in some cases it was even impossible for consumers to have these forecasts adjusted.

D. Maier / Editor