Berlin approves limiting gas and heating prices to citizens and companies
The German Government has approved bills establishing brakes to electricity, district heating and gas prices for consumers from March 2023, although with measures that can be carried out with retroactive effect from January. The initiative aims “to protect” to “all homes and businesses, as well as, for example, hospitals, residences and cultural entities. All those who already pay high prices will be relieved,” explained the German Executive when announcing the approval.
These cost brakes will be in force until April 2024 and the coalition government of Olaf Scholz has stressed that they constitute “the core” of the economic defense plan, endowed with 200,000 million euros, which had already been announced several weeks ago as a “shield” against the economic impact of the war in Ukraine. The Government defends that part of the financing of these measures will come from the energy companies that have benefited tremendously and unforeseen increase in their income due to the rise in gas and electricity prices.
The gas and heating price brake bill provides that for households, as well as small and medium-sized businesses that consume less than 1.5 million kilowatts/hour per year, and entities dedicated to caring for peoplethe research and the education The price of gas will be limited to 12 gross cents per kilowatt/hour. For its part, energy for heating will have a ceiling of 9.5 cents and the approved limits will be calculated based on 80% of the corresponding expected annual consumption that was forecast in September of this year.
For consumption that exceeds this quota, consumers must pay the contractually agreed price with the suppliers, and the Government indicates that in March 2023 they will be relieved retrospectively amounts in excess paid in the months of January and February.
Businesses will also benefit of the limit announced since January: the price per kilowatt/hour for industrial customers will be at a maximum of 7 cents net in what affects gas; In heating, the ceiling will be 7.5 cents and the prices will be calculated in relation to 70% of the annual consumption that they had in 2021.
In relation to the prices of electricity for households and SMEs (with a consumption of up to 30,000 kilowatts/hour per year), the a cap of 40 cents per kilowatt/hour gross and calculated from 80% of forecast consumption for the whole year. For industrial clients, the limit will be 13 cents plus taxes and the limit will be calculated in relation to 70% of consumption to date.
The coalition Executive has explained when publishing the details of the bills that the announced brakes “were made necessary because, as a result of Russia’s illegal attack on Ukraine, European wholesale prices for natural gas had multiplied in a year.” “This has also pushed up prices for electricity and district heating. Depending on the type of contract and the duration, high energy prices are reflected in household and business bills more or less clearly and quickly”, the Government states.
Berlin warns that energy-intensive industry “is in danger“, but also “all companies have to reckon with rising production costs. Therefore, many companies have already begun to increase the prices of their final products”. The Government also assures that this situation explains the high inflation rates registered in Germany, which in October stood at 10.4%
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