Bundestag MPs on Thursday passed by a majority vote the second and third readings of bills on a package of measures that would set a price ceiling on gas, heat and electricity for companies and households, the German Economy Ministry said.
“The German Bundestag today adopted in its second and third reading bills on price brakes on electricity, gas and heating,” it said in a statement. The price brakes will apply throughout 2023. The ministry also said it plans to extend the measure until April 2024, but in that case a separate decision will have to be made.
Under the new package, the price of gas for private households, small and medium-sized enterprises, as well as social institutions will be limited to 12 cents per kilowatt hour gross (i.e. including all taxes, fees and surcharges), for heat – 9.5 cents per kilowatt hour gross. According to the German authorities, at the moment the prices in the new gas supply contracts for consumers are on average around 21 cents per kilowatt hour.
Under the new package of measures, the price of electricity for private consumers and small businesses will be capped at 40 cents per kilowatt hour gross. As German Chancellor Olaf Scholz previously told reporters, before the Russian special operation in Ukraine, electricity prices in the country were on average around 30 cents per kilowatt-hour for consumers – “sometimes a little higher, sometimes a little lower”.
It is specified that the price ceiling will be applied to 80% of annual consumption projected for September 2022. For consumption exceeding this quota, it will be necessary to continue paying the contracted price. According to the Ministry of Economic Affairs, this creates an incentive for savings. The allowance will be applied retroactively from March 2023 for the months of January and February 2023, the ministry explained.
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Consumers will not have to apply for a refund in order to take advantage of the aid package – the benefit will be automatically provided by suppliers in the form of lower fees or lower final bills based on the existing contract.
As the ministry explains, the energy price braking has become necessary because European wholesale natural gas prices have increased several times over the year. According to the German authorities, this was a result of the conflict in Ukraine, which also led to higher prices for electricity and district heating.
The Bundesrat will vote on a package of measures setting a price ceiling on gas, heat and electricity for companies and households next Friday, 16 December.
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