Gas price brake should take effect from January

With the fuel price brake, citizens and companies should be relieved for January and February 2023 retrospectively. So far, a relief has become clear from March 2023 to spring 2024. As ZDF learned from government circles, aid amounts for January and February will be retroactively deposited in March. According to the information obtained, this procedure is also planned for the electric price brake. Economists welcomed these plans.

The federal government is responding to the sharp rise in energy costs with billions of dollars of energy price brakes and wants to ease the burden on private households and companies. In the first step, the Bundestag and the Bundestag decided to make a one-time payment in December.

With the gas price brake, households and small and medium-sized companies will receive a guaranteed gross gas price of 12 cents per kilowatt hour for 80 percent of their previous consumption. The contract price should be valid for the remaining 20 percent of consumption.

The guaranteed gross price for district heating should be 9.5 cents. A gas price brake is also planned for the industry from January. These large consumers will receive a guaranteed price of 7 cents per net kilowatt hour for 70 percent of their previous consumption.

Aid for industry is subject to conditions. According to the draft, in principle, no dividends can be paid during the stabilization measure. By far the biggest part of the brakes on energy prices will be financed through a “defensive shield” of up to 200 billion euros, with the federal government incurring new debt.

According to the draft submitted to the dpa news agency, Russia’s war of aggression against Ukraine, which disregards international law, has aggravated the situation in the German and European energy markets throughout 2022.

In particular, the recent very high price increases for natural gas and heat represent a “significant, sometimes existential burden” for the population and companies in Germany. “These are a huge socio-political and economic challenge.” Price brakes should mitigate rising energy costs and the most serious consequences for consumers and companies. The federal government had set up a commission of experts for this purpose.

Economists welcome the release of the gas price brake to be postponed to January and February as scheduled. Professor Jens Südekum, from the Heinrich Heine University Institute for Competitive Economics in Düsseldorf, told Reuters news agency:

“Because the gas is consumed when it is cold. Then the support must flow,” he stressed. Most consumers would use the previously unpredictable rain of money to pay for their rising gas bills. “However, those who can use the unexpected inflow of money for additional consumption are those households that certainly have sufficient savings and are not dependent on government support,” said a member of the scientific advisory board of the Federal Ministry of Economy. Maybe even in the Christmas business, which can support the economy.

The President of the German Institute for Economic Research (DIW) considers it particularly important that assistance is now immediately transferred to all tenants through lower heating bills. “This is good news, especially for low-income people, because they are no longer burdened by higher gas and electricity prices as they used to,” said Marcel Fratzscher.

However, the federal government’s price brake won’t change anything about “the fact that the economy will go into recession in the coming months and private consumption will be particularly badly hit, especially for low-income people.” put a price brake, own more than one and you will see gas and electric bills double”.