Source: Energy & Management Powernews, November 29 2022
The Federal Cabinet has approved the gas and electricity price brakes planned from January 2023. For the entry into force Bundestag and Bundesrat must still adopt the laws in December.
The Federal Ministry of Economics has brought the draft laws on the relief for energy customers in electricity, natural gas and heat prices through the Cabinet. With the price brakes worth billions the Federal Government reacts to strongly risen energy prices. They are intended to cushion the impact on households and businesses. It is planned that electricity, gas and heating prices will be capped for a proportion of consumption. The price brakes are financed from the defense umbrella with a total volume of 200 billion euros.
Federal Chancellor Olaf Scholz (SPD) said, "We cap the price of energy so that citizens can cope with the new prices and with the challenges." Under the gas price brake, households and small and medium-sized enterprises are to be guaranteed a gas gross price of 12 cents/kWh for 80 percent of their previous consumption. For heating customers, the price is to be 9.5 cents/kWh up to the 80 percent limit. For electricity, the gross price will be capped at 40 cents/kWh. For the remaining 20 percent of consumption, the contract price is to apply, thus encouraging energy savings.
Industry relief only up to 70 percent of previous year's consumption
For industrial customers, the price is capped only for 70 percent of 2021 annual consumption, at 7 cents/kWh net. For heat, it will be 7.5 cents/kWh net, and for electricity, 13 cents/kWh. The relief is limited until April 2024 and is to take effect from March 2023. However, citizens and companies are to receive retroactive relief for January and February as well, by including the relief for the two previous months in March. An earlier conversion was technically not to be realized for the suppliers, because they must issue and dispatch now millions of calculations.
The electricity price brake is to be financed partly over a skimming of so-called coincidence profits. This concerns electricity producers who have profited from high prices on the stock exchange due to the Ukraine war. According to the cabinet decision, the skimming of proceeds is not to begin until December 1, 2022, and not retroactively as of September 1, as previously planned. Praise for the price brakes gave it among other things of the federation of the German automobile industry (VDA) and of the central association of the German handicraft (ZDH).
Still many points of criticism of the energy enterprises
In a first reaction to the bills BDEW chief executive Kerstin Andreae explained: "So that the reliefs arrive also really with humans, the gas, heat and the electricity price brake must be convertible however also fast and uncomplicated." This is still very questionable, especially with the electricity price brake. It is in many places too complex, too unclear and too bureaucratic.
The government draft contains improvements to the draft bill. Thus the surplus revenue skimming is now temporally more narrowly limited from 1 December 2022 to 30 June 2023. It can be extended at the most to 30 April 2024. In the regulations on the Renewable Energy Sources Act (EEG), it is "completely incomprehensible" that the urgently needed increase in the maximum values in the tenders for EEG plants has again been removed from the draft bill. After all, capital and material costs had risen and no expansion was possible at the old prices, Andreae appealed.
Do not put CHP and biomass at a disadvantage
Ingbert Liebing, chief executive of the Association of Municipal Enterprises (VKU), called the price brakes correct. He welcomed the fact that the disadvantage of municipal utilities in the price brakes was lifted. "As demanded by us, now exclusively withdrawal points, which serve the production or conversion of energy, remain excluded from the relief by the price brakes", said Liebing.
In two other central points, however, the criticism of the VKU would remain. Thus, the avoided network use fees should not simply be dropped without replacement. Without these fees for decentralized feed-in, the calculation basis of numerous municipal combined heat and power plants (CHP) and thus their continued operation would be endangered. "We build on the parliamentary deliberations to correct this misguided approach," Liebing hoped.
However, operators of plants would still have to fear a skimming due to reference costs and safety margins that are set too low, even if they do not achieve particularly high profits at all. This could particularly affect biomass and waste wood plants, which have to contend with massive cost increases. "We therefore call for CHP, biomass, waste, sewage sludge or sewage gas, mine gas and refined lignite products to be exempted from revenue skimming," Liebing concluded.
Author: Susanne Harmsen
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