High energy prices: German government examines support for poorer households

The German government has promised to look into short-term support for poorer households which are facing price hikes for electricity, oil, and gas, reports Tagesspiegel Background. Finance minister Christian Lindner said the government would examine measures to help households which are most affected by the price increase for energy. "I pledge, with the means I have, that we will finance such solidarity-based support for people who are particularly affected by the increased costs of heating," said the minister. Other EU countries like Spain decided early on to support citizens affected by rising prices, but the German government had so far refrained from short-term measures. In the longer term, reducing the renewable energy surcharge (EEG levy) on the power price and a so-called “climate payment” to all citizens are envisaged to compensate people for rising energy costs, also due to higher CO2 pricing. As of 2022 the renewables levy has been reduced to 3,72 cent per kilowatt-hour, from 6.5 cents the year before. Social housing subsidies have also been increased to account for a higher CO2 price on heating fuels as of 2022.

German consumers have started to become more and more affected as suppliers grapple with higher fuel acquisition costs caused by an energy crunch in Europe this winter. While some electricity suppliers have adapted their bills accordingly, others have terminated running supply contracts with consumers and several companies have filed for insolvency. Affected households automatically receive power and gas from their local standard provider ("Grundversorger", often the municipal utility) which usually charges higher prices than other suppliers. Consumer protection advocates say that in the case of low-cost supplier Stromio, which cancelled consumer contracts before Christmas, several hundred thousand households are affected. The local standard suppliers which are legally obliged to supply any household have in turn started to charge more to their new (involuntary) customers than their existing clients. Comparison website Check24 has counted around 260 standard suppliers who have introduced new tariffs exclusively for new customers, raising prices by an average of 106 percent. Power prices in Germany are among the highest in the world, even though the country ranges in the European mid-field if prices are seen as a fraction of disposable income.