Budget crisis: Energy industry warns of rising electricity prices

The energy industry is warning of rising electricity prices in the wake of the budget crisis.

Budget crisis: Energy industry warns of rising electricity prices

The energy industry is warning of rising electricity prices in the wake of the budget crisis. Without a federal subsidy for transmission network fees, end customer prices would rise significantly, said Kerstin Andreae, chairwoman of the executive board of the Federal Association of the Energy and Water Industry (BDEW), to the German Press Agency. "An affordable power supply is of great importance - also from a socio-political point of view - especially in times of uncertainty." The BDEW appeals not to question the subsidy, but to leave it in place and secure financing as quickly as possible.

Specifically, it is about a federal subsidy planned for next year to partially finance the transmission network costs of up to 5.5 billion euros. The money was supposed to come from the Economic Stabilization Fund (WSF) - however, as a result of the Federal Constitutional Court's budget ruling, the federal government must dissolve this special fund at the end of the year. The money for the subsidy would now have to come from the core budget. But that could be difficult. The federal government has to fill a hole of 17 billion euros.

Price controls expire at the end of the year

The WSF also finances the state energy price brakes, which expire at the end of the year and not at the end of March as originally planned. Chancellor Olaf Scholz (SPD) said in the Bundestag that electricity and gas tariffs are now available again everywhere in Germany, which are significantly higher than before the crisis - but mostly below the upper limits of the price brakes and also noticeably below the prices last autumn Winter. Should energy prices unexpectedly rise dramatically again, the federal government will always be able to take countermeasures at short notice.

Association warns of domino effect

“Due to the effects of the energy crisis, electricity prices are still significantly higher than in the past,” said Andreae. "That's why it was absolutely right for the Bundestag to cap transmission network fees and thus curb end customer prices." After the extreme increases in energy prices last year, it is now important to signal consistency and reliability to customers.

"If the subsidy were to disappear, this would also trigger a domino effect for companies at various levels of the energy industry's value chain: If the transmission network fees increase, the distribution network operators will also have to increase their fees," says Andreae. "The energy suppliers must in turn take the overall increase in network fees into their price calculations and adjust prices that have already been announced. Due to the legal deadlines, this would no longer be possible by January 1, 2024, but would have to be done as quickly as possible."

The network fees are part of the electricity price. If the federal subsidy for the fees for the transmission networks - the electricity highways - ceases to apply, the comparison portal Verivox expects a family with an electricity consumption of 4,000 kilowatt hours to incur additional annual costs of around 100 euros.

The green electricity provider LichtBlick expects an additional burden of almost 170 euros for a household with an annual consumption of 4,000 kilowatt hours if the federal subsidy ceases. Gross electricity costs would increase by 4.15 cents per kilowatt hour. The promised subsidization of transmission network fees, which the electricity network operators have already factored into their network fees, must be maintained.

Warning also from the chemical industry

The Chemical Industry Association (VCI) also expressed alarm. “The electricity prices in Germany are already a massive competitive disadvantage,” said VCI Managing Director Wolfgang Große Entrup on Friday. “We have been fighting for relief for months.” It would be “completely ignorant” if the planned federal subsidies to stabilize network fees were canceled and these costs would be threatened to double for all electricity consumers. In the event of electricity price increases, the transformation to climate neutrality would be further jeopardized.