17 Aug 2023, 13:30
Benjamin Wehrmann

Energy crisis price cap for gas and electricity led to desired effect, German govt says

Clean Energy Wire

The price caps for gas and electricity (dubbed "price brakes") introduced by the German government have led to “an effective reduction of additional costs for households across the board,” a report published by the government found. The price caps, which were implemented to provide relief for consumers during the ongoing energy crisis, have been applied gradually since the beginning of 2023 to households, companies, social institutions, educational facilities and more. Implementation of the cap has had “a deflationary effect on consumer prices” and helped poorer customers more so than affluent ones, the report found. The economy and climate action ministry (BMWK) added, however, that its analysis only provides a “first glance” at the impact of the cap, which cannot yet be assessed in full. “This especially concerns energy saving measures by households along the income curve,” the ministry said. A final evaluation will not be possible before the end of the year, it added. Between January and May this year, customers received payments from the government totaling around 18 billion euros due to the price caps. In December last year, a further 4.7 billion euros was distributed as immediate aid.

Municipal utility association VKU were critical of the price caps, saying they had come with “significant shortcomings and errors.” VKU head Ingbert Liebing said the measures should only serve as a “provisional crisis tool,” as they had consumed “enormous personnel and financial resources” from the energy providers charged with implementing them. Liebling argued further that, should similar support measures become necessary again, the government should directly assist individual households according to their needs, rather than tasking suppliers with implementation. 

Germany introduced gas and electricity price caps as part of its 200 billion euro “defence shield” package to protect households and businesses against soaring energy costs. The caps were applied throughout 2023. Gas prices for households were capped at 12 cents per kilowatt hour (kWh) and electricity prices at 40 ct/kWh. Companies pay 7 and 13 ct/kWh, respectively, for a predetermined share of their consumption. 

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