Gas price brake: What does the relief mean for consumers and how does it work?

An overview

Created: 11/21/2022 13:37

By: Isabelle Jentzsch

The gas price brake is intended to relieve consumers of the energy crisis from March 2023.

How exactly does it work, who benefits from it and what are the disadvantages - an overview of the most important questions.

Berlin – The federal government has decided on the gas price brake.

It is intended to relieve consumers of the sharp rise in prices as a result of the energy crisis.

But as hopeful as the gas price brake sounds, it comes with a few snags around the corner.

Gas price brake: how does it work?

The annual consumption forecast is important for the gas price brake.

However, the gas price brake only applies to 80 percent of this forecast.

The federal government is thus encouraging consumers to save gas themselves.

If a 1-person household has a previous year's consumption of around 5000 kilowatt hours, the gas price brake only applies to 4000 kilowatt hours.

As part of the price brake, a price of 12 cents per kilowatt hour is set for a certain basic quantity of gas.

For 80 percent of the current annual consumption, households receive a state-guaranteed price of 12 cents per kilowatt hour, including duties and taxes.

The more the gas supplier has already increased the price by more than 12 cents, the more you benefit from the gas price brake.

But for every kilowatt-hour that exceeds the 80 percent mark of annual consumption, you pay the working price agreed with the gas supplier.

If the annual consumption forecast for a 3-person household says, for example, that around 12,000 kWh of gas will be consumed, the household will in future receive 80 percent of this, i.e. 9600 kWh, at a fixed price capped by the state.

Anything else that the three people in the household consume in terms of gas, however, they pay at the contractually agreed price of their gas provider.

So it is also in the interest of the three people to reduce their gas consumption.

Who does the gas price brake apply to?

In principle, the price brake applies to everyone who purchases gas, regardless of whether it is a private household or a company.

However, a special regulation applies to large industrial companies, around 25,000 companies.

For these companies, a price cap of 7 cents per kilowatt hour applies to 70 percent of their consumption.

The annual consumption of the companies in 2021 is taken as a basis.

The federal government has decided on the gas price brake.

Consumers are to be relieved from March 2023.

(Iconic image) © IMAGO/Christian Ohde

When will the gas price brake apply?

The federal government plans to introduce the gas price brake for private households from March 2023.

It should then also apply retrospectively to February 2023.

For companies, it will take effect from January 2023. In addition to the gas price brake, emergency gas aid was decided for December 2022.

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What is emergency gas aid?

The gas emergency aid is intended to bridge the time until the gas price brake and reimburses a monthly share of the annual consumption.

The calculation is based on the annual consumption that was calculated in September 2022.

In this way, emergency aid cannot be manipulated in favor of consumers.

For example, if the consumption forecast in September 2022 was 12,000 kWh for the whole year, the consumer will be paid a twelfth of that, i.e. 1000 kWh.

The payment is made at the price that applies in December 2022.

A possible price increase between the months of September and December is also taken into account.

In addition, the monthly basic price of the gas contract does not have to be paid in December 2022.

Until when is the gas price brake valid?

The gas price brake is expected to apply until April 2024.

If it is still necessary after that, it can also be extended, says the federal government.

Can district heating customers also benefit from the gas price brake?

Many district heating providers have also raised their prices.

That's why 80 percent of basic consumption is capped there as well, but only at 9 cents per kilowatt hour.

VAT was reduced to 7 percent and emergency aid is also planned for December.

How is the gas price brake financed?

The Economic and Stabilization Fund (WSF) is to finance the gas price brake.

The special fund was set up in 2020 to deal with the enormous economic burdens caused by the corona pandemic, but has recently not been actively used.

The federal government is releasing a total of 200 billion euros to combat gas price increases.

The loans are allocated to the current year, and from 2023 the debt brake should be complied with again.

What are the disadvantages of the gas price brake?

On the one hand, the price brake means an enormous financial burden for the state coffers.

On the other hand, many experts fear that the relief will not encourage consumers to save energy.

"Prices must express scarcities in order to create incentives to save," explains economist Andreas Loechel to

.

The high demand for gas can result in shortages in winter.

Tenants can also suffer from the gas price brake at a disadvantage.

In the worst case, the relief may not reach consumers until December 2023.

In principle, landlords have up to one year to prepare the bill and send it to the tenants.