Warning shot: Habeck warns suppliers against abuse in tariff increases - "Do not test the gray area"

Created: 12/05/2022 11:42 am

By: Thomas Schmidtutz

Warning shot: Federal Economics Minister Robert Habeck (Greens) has warned utilities against excessive tariff adjustments.

© Bernd von Jutrczenka/dpa

In view of sharply rising procurement costs, many suppliers are turning the price screw.

Federal Economics Minister Robert Habeck sees this with great suspicion.

Berlin – Federal Minister of Economics Robert Habeck (Greens) has warned suppliers against excessive increases in their electricity and gas tariffs.

He assumes that everyone will “adhere to the law and, in the emergency situation we are in, only pass on the prices that are really necessary to consumers,” said Habeck on Sunday.

However, if energy suppliers are considering "testing a gray area", the abuse clause envisaged in the laws on gas and electricity price brakes is certainly an instrument to take action against it.

In recent months, many suppliers have increased their electricity and gas prices, sometimes drastically, in some cases by more than 100 percent.

In view of this, consumer associations had sounded the alarm.

The tariff increases are not always covered by sharply increased procurement costs, it said. 

In the laws for the design of the planned electricity and gas price brakes, the federal government wants to prevent possible abuse.

To this end, price increases are to be prohibited in principle until the end of 2023 - unless suppliers can prove that the increase is objectively justified", for example because of "market-based price and cost developments".

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Abuse control: the Cartel Office receives a sharp sword

In order to give the regulation more weight, the Federal Cartel Office has been given far-reaching rights of access.

Among other things, the regulation provides for a reversal of the burden of proof.

According to this, suppliers must prove in cases of doubt that tariff increases for consumers are justified by the corresponding increase in procurement costs for power plant operators or gas importers.

A reversal of the burden of proof is unusual and is considered a particularly sharp sword against abusive pricing.

The federal government passed the draft law on energy price brakes at the end of November.

They are to be adopted by the Bundestag and Bundesrat by mid-December.

According to the plans, electricity consumption for a basic quota is to be capped at 40 cents per kilowatt hour, with the gas price capping at 12 cents.

Beyond these ceilings, households have to pay the market price.

The traffic light is intended to create an incentive to save energy.

Many economists view the regulation with skepticism.