Russia’s war of aggression against Ukraine has also caused energy prices to rise sharply in Germany. The federal government wants to cushion the consequences for households and companies with “price brakes” for electricity, gas and district heating. They should take effect from March – after widespread criticism, relief is now planned retrospectively for January and February. A price cap should apply to a large part of the previous consumption. This should give an incentive to save energy for the remaining consumption. But how exactly is all this supposed to work? An overview.
When will the next reliefs reach consumers?
Politicians have decided on several relief measures, such as a 300-euro energy price lump sum for taxable employees in September and a reduction in VAT on gas deliveries. The next step: In December there is a one-off emergency aid for gas and district heating customers. You are then not obliged to pay advance payments. However, amounts paid must be offset by energy suppliers in the next invoice. Private households and small and medium-sized companies in particular are entitled to emergency aid, but so are social, research and educational institutions. The subsidy also applies to rental apartments. The relief must then be passed on to tenants with the next annual service charge statement.
According to the consumer advice center, the exact amount of the relief for gas customers is determined in a second step via the annual statement. The relief corresponds to the energy price valid in December, multiplied by a twelfth of the annual consumption that the supplier had forecast in September 2022. In addition, one twelfth of the basic annual price will be waived.
When will the energy price “brakes” come?
According to the plans announced by government circles on Tuesday, the price brakes will only apply from March, but the relief contributions for January and February will then be credited retrospectively. The plans provide for new, lower discounts from March, in which the price brakes have been taken into account. Both regulations are to apply until the end of April 2024. A cabinet decision is expected shortly. The corresponding law then has to be passed by the Bundestag and Bundesrat, which is planned for mid-December.
How does the gas and district heating price brake work?
For households and small and medium-sized companies, 80 percent of the annual consumption forecast for September 2022 will be capped at 12 cents per kilowatt hour for natural gas and 9.5 cents per kilowatt hour for district heating, both gross. The price contractually agreed with the energy supplier applies to the remaining 20 percent. This is intended to encourage consumers to save as much gas and heat as possible.
Important: If you consume more than the subsidized 80 percent gas, the new high price in the supply contract applies for each additional kilowatt hour. But if you have consumed less, you save for every kilowatt hour of gas saved at the new high contract price – even if you have saved more than 20 percent. “The incentive to save is particularly high,” the government said.
An example was given: A family of four with a 100 square meter apartment has a gas consumption of 15,000 kilowatt hours (kWh) per year. Your previous gas price was 8 cents per kWh, i.e. 100 euros a month – your new gas price is 22 cents. Without the gas price brake, the family would have to pay 175 euros more per month than before. With the gas price brake, she pays 175 euros a month for the same consumption. If the family uses less gas at the end of the year, they get money back on their final bill – if they save 20 percent, they get 660 euros back.
The state-subsidized relief amount will benefit the budget in any case, according to government circles. He is thus independent of consumption.
Large consumers, for example from industry, are also relieved. A guaranteed price of 7 cents per kilowatt hour applies to them, but net and only for 70 percent of the consumption volume in 2021. According to the information, the “industrial gas price brake” will apply to around 25,000 companies and 1,900 hospitals nationwide. The price brake should also apply to the material use of the gas, for example in the chemical industry. The regulation does not apply to gas-fired power plants.
And how does the electricity price brake work?
As with gas and district heating: 80 percent of households and small companies are capped at 40 cents per kilowatt hour. For those who are already paying more than 40 cents, the brake should directly reduce the monthly electricity bill, according to the government. Normally, the deduction is calculated on the basis of previous electricity consumption. If you use more than 80 percent of the previous electricity consumption, the new high price in the supply contract applies for each additional kilowatt hour. This should provide an incentive to use less electricity. In the annual bill at the end, the actual consumption should be billed at the respective prices.
For industrial customers, the cap is 13 cents for 70 percent of previous consumption. In order to finance the electricity price brake and a reduction in grid fees, “accidental profits” from electricity producers, such as green electricity from wind and sun or nuclear power, are to be skimmed off in part.
What do consumers have to do to benefit from the respective brake and emergency aid in December?
Consumers do not need to do anything for this. According to Udo Sieverding from the consumer advice center in North Rhine-Westphalia, it is intended that the electricity and gas price brakes will directly reduce the monthly payment. The suppliers should take care of the billing.
The December emergency aid for gas and heat should also end up with the customer automatically. The suppliers calculated the relief according to the legal requirements and passed them on to their customers, says a spokesman for the Association of Municipal Companies (VKU). The supplier is also applying for the necessary funds.
How do suppliers determine the consumption of a household, which is the basis for the gas and electricity price brake and the one-off payment?
The amount of the brakes should be calculated from the annual consumption that the supplier has forecast for September 2022. According to the VKU, the same value should serve as the basis for the one-off waiver of the gas advance payment in December – just divided by twelve. This number, multiplied by the working price valid in December 2022, plus one twelfth of the annual base price, will then be waived.
In the case of district heating one-time payment, however, it should not depend on annual consumption. “According to the legal provisions, the amount of the monthly advance payment made to the heat supplier in September 2022 is taken into account here, alternatively the monthly invoice amount,” says a VKU spokesman. On top of the September discount, there is then an additional 20 percent to reflect price increases between September and December.
Which value is assumed if there is no previous year’s consumption or the supplier was changed after September?
“Then it will probably be estimated,” says Udo Sieverding. The plan is for the energy supplier to consult a consumption forecast from the grid operator. It is unclear what happens if a household’s consumption changes, for example due to a move to a larger or smaller apartment or additional people in the household.
What to do if the consumption assumed by the supplier seems too low?
“The assumed consumption relates to a closed period of time, and customers cannot change the value,” says Udo Sieverding. If consumers believe that their supplier has used an incorrect value, they should contact them and ask for a correction.
How do tenants get relief if the landlord is the supplier’s contractual partner?
For example, if landlords do not adjust the heating cost advance payment due to the planned brake, tenants may only benefit from the relief when the ancillary costs are settled. According to consumer advice centers, the one-off payment should also only reach tenants with the utility bill in 2023. Most tenants conclude electricity contracts themselves with the supplier, so the reduction in the down payment would be noticeable earlier.
Can tenants reduce the rent at the beginning of the gas price brake if the landlord does not take the relief into account right away?
No, according to consumer advocate Sieverding, that is not possible.
How much can households save with the gas and electricity price brake?
That depends on the contractually agreed prices. If the electricity price is around 46 cents per kilowatt hour, according to an example calculation by the comparison portal Check24, a model family with an annual consumption of 5000 kilowatt hours will be relieved of 220 euros with a 40 cent price cap. A single with a consumption of 1500 kilowatt hours would be relieved by 66 euros.
It is similar with the gas price cap. Here the cap should be 12 cents. If consumers pay 17.9 cents per kilowatt hour, a two-person household with an annual consumption of 12,000 kilowatt hours would be relieved by 556 euros per year, according to the comparison portal Verivox, and a single person (5000 kilowatt hours/year) by 232 euros.
Are there also price brakes for liquid gas, oil or wood pellets?
no The planned gas price brake only applies to natural gas, not to liquid gas that is brought to customers in tankers. According to the consumer advice center, households with oil or wood pellet heating systems should be given money from a hardship fund if there would otherwise be “unreasonable burdens”. The criteria for this are still open.
Where does the money for the relief come from?
The money comes from the Economic Stabilization Fund. This “defense shield” is said to be worth up to 200 billion euros, for which the federal government is taking on new debt. (dpa)