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Gas price brake: This is how the traffic light could actually reduce the costs for households and companies

2022-10-02T05:49:22.197Z


Gas price brake: This is how the traffic light could actually reduce the costs for households and companies Created: 2022-10-02 07:38 By: Lisa Mayerhofer Instead of the gas price apportionment, the traffic light is now relying on the gas price brake. But the specific form is still open. What scenarios are likely. Munich – There will be no gas surcharge, but there will be a gas price brake: The


Gas price brake: This is how the traffic light could actually reduce the costs for households and companies

Created: 2022-10-02 07:38

By: Lisa Mayerhofer

Instead of the gas price apportionment, the traffic light is now relying on the gas price brake.

But the specific form is still open.

What scenarios are likely.

Munich – There will be no gas surcharge, but there will be a gas price brake: The federal government wants to protect citizens and companies from unbearable costs in the energy crisis with a “defense shield” of up to 200 billion euros.

Chancellor Olaf Scholz (SPD) spoke of a "double boom" in a situation in which Russia used "its energy supplies as a weapon".

The gas levy that has already been decided to support gas importers, which would have burdened private consumers and companies from October 1, will be withdrawn, said Scholz.

Instead, the government's "big defense shield" in the energy crisis now provides for a gas price brake in order to reduce consumer costs.

How should the gas price brake work?

For consumers, a “basic consumption” is to be subsidized by the state if there is a gas price cap – lower prices would therefore apply for this amount of gas.

Such a general "basic consumption" should also be defined for small and medium-sized companies, for large companies the subsidized amount of gas should be determined individually.

There are no details yet - the government is waiting for proposals from an existing "Gas and Heat Expert Commission", which should be available in mid-October.

Both Federal Economics Minister Robert Habeck (Greens) and SPD leader Saskia Esken discussed subsidizing 80 percent of the average previous gas consumption on Friday.

Habeck emphasized that market prices would have to be paid for gas consumption in excess of this – this should motivate people to save energy.

It is also still unclear how exactly the price reduction will be organized for a specific consumption quota.

It is conceivable, for example, that the suppliers lower the price for their customers accordingly and get the difference back from the state.

Habeck did not rule out direct government payments to consumers on Friday.

The gas price cap has replaced the gas surcharge.

(Iconic image) © Frank Hoermann/ Sven Simon/Imago

How much will the gas price brake cost?

Depending on how it is designed, the planned gas price brake will cost the state around 16 to 37 billion euros in 2023. The Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation, which is close to the trade union, calculated three models at different gas prices.

The cheapest would be a state-subsidized basic quota depending on the number of people in the household, the IMK explained on Friday.

A price cap based on the previous year's consumption of a household would be significantly more expensive.

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In the first model, each private household would receive a basic quota of 5,000 kilowatt hours at a subsidized price – plus 2,000 kilowatt hours for each additional household member.

In the second model, the state would subsidize 80 percent of the previous year's consumption.

This would avoid the bureaucratic effort of determining the number of people living in a household.

The third model - designed like the second - also provides for an upper limit of 15,500 kilowatt hours in 2023.

This would prevent households with high incomes, large living areas and additional facilities with high energy consumption such as swimming pools from benefiting particularly.

The IMK researchers assumed two prices for each of the three models – once 14 cents per kilowatt hour, which corresponds to the current average price for end customers, and once ten cents.

For the basic quota, the state reimburses the energy suppliers for the difference to the market price.

According to IMK estimates, it should be 25.4 cents in 2023.

The first model would be the cheapest for the state (15.6 billion euros with the price variant 14 cents per kilowatt hour), the most expensive would be the second (36.5 billion with the price variant ten cents).

The third would be somewhere in between in terms of cost.

Gas price cap: what does the government have to consider now?

Clemens Fuest, President of the renowned ifo Institute, praised the government for wanting to counter the crisis.

But the economist also warns: “In fact, a lot of money can also cause a lot of damage.

The greatest danger is that the aid will increase demand for energy.”

Because: If more money is earmarked for a limited amount of gas, it only drives up gas consumption and prices.

It also increases the likelihood of gas rationing in January 2023 because too much gas was consumed beforehand.

"If other countries in Europe do the same thing, this problem will get worse," explains Fuest.

It is therefore particularly important to increase energy saving incentives and to support them in a way that does not increase energy consumption.

Fuest also emphasizes: "Everything must be done to produce more electricity as quickly as possible, i.e. to connect more power plants to the grid, and to bring more gas to Europe, above all by accelerating the construction of LNG terminals, but also by preparing Gas extraction through fracking in Germany.

We need a bang when it comes to increasing the energy supply, not the demand.”

(lma/AFP/dpa)

Source: merkur

All news articles on 2022-10-02

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