- Gas, electricity price caps to apply from January
- Firms would be allowed to pay dividends, bonuses
- Windfall tax on power firms to apply until at least June
According to Reuters article published on November 22, 2022, the German government plans to cap gas and electricity prices in March 2023 retroactively covering prices from January, according to a draft plan seen by Reuters on Tuesday.
Tapping a 200-billion-euro "defence shield" created to counter the impact of Russia's invasion of Ukraine and taxes on windfall profits, Germany will cap prices for private households and small companies until the end of April 2024, the draft showed.
The cap will cover 80% of private households and small companies' previous year's gas consumption at 12 euro cents per kilowatt hour, it said.
The draft laws are meant to be passed by the cabinet this week so that they can pass both houses of parliament in December.
Consumers who have new contracts and are already paying new high prices will receive compensation at the end of the year if they had reduced their consumption.
For industry, a gas price cap will take effect from January at 7 cents per kWh covering 70% of consumption.
POWER
Electricity prices for private households and companies with consumption of up to 30,000 kWh per year will be capped at 40 cents per kWh, including taxes and network charges, the draft showed. This will also apply to 80% of consumption.
The cap will be 13 cents per kWh for 70% of industrial power users' consumption.
Companies benefiting from these caps may pay dividends and bonuses, but firms receiving direct capital aid to stay afloat may not, the draft said.
However, this issue will be addressed in parliament again when the bill is presented in December, as there has been no final agreement in the ruling coalition.
FUNDING
To finance the plan, the state will temporarily levy charges on profits of power generators deemed excessive.
These will apply retroactively from Sept. 1, 2022, and last at until at least June 2023 though they could be extended until the end of 2024, depending on the European Commission's review of the levy.
While volumes and market prices of electricity production costs can be tracked to the hour, bilaterally agreed prices are confidential between vendor and consumer if they do not choose a public marketplace to buy or sell.
Therefore, relevant operators will have to choose whether to open up their books to state scrutiny to obtain a fair profit tax level.
Alternatively, they can have their taxable profits calculated and audited based on average wholesale spot and forward prices.
The draft said in order to avoid hurting new plant investment security margins and deductions would be allowed and wholesale price setting would be left intact.
