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Without government assistance, millions of German households will see their electricity costs rise by 50%


If the plans of the German government to place a cap on electricity prices are not implemented, the cost of power for millions of families in Germany would increase by more than fifty percent at the beginning of the new year. According to the website Check24, which compares prices, more than 580 power providers in the country have declared average base supply price rises of 60.5%, which will affect around 7.3 million of the 42 million households in the country. According to competing portal Verivox, which makes use of a different data set, the price increase, which is mostly attributable to the sharp surge in wholesale prices as a result of the conflict in Ukraine, will average 54 percent. According to Check24, the cost of one kilowatt-hour of electricity for a home with an annual use of 5,000 kilowatt-hours (kWh) has increased to 42.7 cents, up from 31.6 cents a year earlier.

According to the story, the consumer counseling center in the state of North Rhine-Westphalia stated that switching from the basic supply to another contract is not a viable option in the majority of situations because the additional contracts are much more expensive. At the beginning of the following year, the government intends to institute a price ceiling for residential energy of forty cents, which will apply to eighty percent of the usage from the previous year. Additional usage will be charged for based on the individual contracts, which will serve to improve the incentives to conserve energy. The government has stated that it intends to implement the cap, which will also apply to the cost of gasoline, by March 2023; nevertheless, the legislation is intended to take effect retrospectively beginning in January. In order to pay for the policy, the government intends to take money from its “defence shield” for the energy crisis, which is worth 200 billion euros, and also to take the windfall profits made by power producers.

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