Consumers: Energy remains a major cost for households

German consumers continue to have to spend a lot of money on household energy.

Consumers: Energy remains a major cost for households

German consumers continue to have to spend a lot of money on household energy. Heat and electricity are significantly more expensive than at the beginning of 2020, i.e. before Corona and the Ukraine war, according to a price comparison published by the Federal Statistical Office on Friday.

In the short term, at the beginning of the heating season, electricity (11.1 percent) and district heating (0.3 percent) are more expensive than a year ago - energy sources that are particularly needed for the heating transition. All others such as heating oil, gas and solid fuels were cheaper in September than a year ago. However, this is solely because the prices for heating oil, wood and gas reached extreme highs last year.

A long-term comparison shows that gas for households is currently almost twice as expensive as it was at the beginning of 2020. According to the price index, light heating oil is even 125 percent more expensive than back then. Firewood and pellets have become around two thirds more expensive. Electricity and district heating have not experienced the extreme price jumps, but are each more than a third above pre-crisis levels.

Expert: Not all consumers benefit from lower stock market prices

“The current lower stock market prices for gas, for example, are a blessing, but they are by no means well received by all consumers,” says energy expert Thomas Engelke from the Federal Association of Consumer Organizations. Many people are still tied to old contracts or have not made any effort to change.

It is therefore correct that the federal government plans to extend the energy price brakes for electricity, gas and district heating introduced in 2023 until the end of April. "This is a precaution for the uncertain future international developments. Nobody knows how oil and gas prices will develop this winter." The Gaza war is causing additional uncertainty. However, the corresponding aid approval from Brussels for the extension of the price caps is still pending.

However, the plan already decided by the cabinet to set the VAT rate on gas and district heating, which was reduced during the crisis, back to 19 percent at the turn of the year is causing dissatisfaction among consumer advocates and energy companies alike. This should bring around an additional 2.5 billion euros into the federal budget, but at the same time it causes a significant price increase in the middle of the heating season. In addition, according to the traffic light plans, an additional around 1.3 billion euros will flow into the state treasury through the larger increase in CO2 prices for heating and refueling. At the turn of the year, the CO2 price is expected to rise from 30 to 40 euros.

BDEW demands clear announcements

Instead of being able to handle the end of the price brake and the VAT change synchronously, suppliers may now be faced with similar problems as they did a year ago. The Federal Association of the Energy and Water Industry (BDEW) is waiting for clear announcements to recalculate tariffs and discounts and to inform customers about the new prices. “The federal government must finally recognize that companies need time to convert their IT systems. This was massively underestimated when the price caps were introduced at the end of 2022. The chaos of last year must be prevented at all costs,” warns BDEW boss Kerstin Andreae.

Consumer advocates and suppliers also agree that the price of electricity in Germany must fall if the energy transition is to succeed. “Households will soon need a lot more electricity if they use electric cars and heat pumps,” says Engelke. “Therefore, the price of electricity must come down in the future.” The obvious starting point is to reduce the electricity tax to the minimum possible under European law, which would bring in around 2 cents per kilowatt hour. There are also options for designing the network fees - in addition to the procurement of the largest item in the electricity price.