Absence of Electricity Tax Reduction: Consumers Overlooked Benefits
Updated Article:
Timestamp: 26.06.2025, 15:03
Originally, everyone was supposed to get a break on electricity taxes. Now, consumers are excluded. Here's what that means for homes.
By Dominik Reinle (Text) and Jörn Kießler (Graphics)
The coalition agreement swore to cut electricity taxes for both businesses and consumers. Yet, homeowners ain't seeing this relief just yet. The reason? The federal government's decision on tight budgets.
Not all businesses will reap benefits either: only a few sectors get a tax cut, sparking national criticism. Some associations slammed Finance Minister Lars Klingbeil (SPD) and Economics Minister Katherina Reiche (FDP) for violating the coalition agreement. Even the -Minister President Hendrik Wüst (SPD) spoke of a breach of the agreement.
- Criticism over Klingbeil's electricity tax in NRW | more
Labeled "subject to funding reservation"
The Federation of German Consumer Organizations insists on staying the course.
However, whether this decision violates the coalition agreement is up for debate. A spokesperson for the Federal Ministry of Finance highlighted that plans will only be implemented if sufficient funds are available.
Savings span across consumption levels
What does this mean for consumers? Short answer: no savings. The exact impact on homes varies depending on their consumption.
The math goes like this: The coalition agreement promised to lower the electricity tax to the European minimum. Currently, private consumers pay 2.05 cents per kilowatt-hour (kWh). The European minimum for individuals is 0.1 cent per kWh. If the electricity tax were reduced to the minimum amount, the savings would be 1.95 cents per kWh. For businesses, the minimum amount is even lower, at 0.05 cents per kWh.
At first glance, this doesn't seem like much. However, a family with an average annual consumption of 4,250 kWh would save around 80 euros. A couple with 2,500 kWh consumption would save about 50 euros, and a single person with 1,500 kWh approximately 30 euros.
These calculations are based on an annual consumption of 4,250 kWh for a family, 2,500 kWh for a couple, and 1,500 kWh for a single person, using current average prices of 26.9 cents/kWh from Verivox.
High electricity costs for households persist
After the Ukraine war began, energy prices skyrocketed. Across Germany, the peak average household price in October 2022 was 53.8 cents/kWh, according to Verivox. In North Rhine-Westphalia, it was 27.8 cents/kWh at the same time.
Although prices have decreased overall, they remain relatively high: Nationwide, they were an average of 35 cents/kWh in June, and in North Rhine-Westphalia, they were 26.9 cents/kWh.
The regional differences in prices between NRW and other German regions are due to varying network fees and competition among local service providers.
One way to save costs for consumers is to switch providers. Especially if they're still with the basic provider. A study of basic supply tariffs in North Rhine-Westphalia by the consumer center found substantial price differences as of January 1, 2025.
New rules for switching electricity providers also apply. Energy suppliers must now complete the technical switch to the new provider within 24 hours on weekdays.
Listen to audio, stop with Escape
No electricity tax reduction: What's at stake - and the effects
our website Studios NRW. 26.06.2025. 03:51 . Available until 26.06.2027. our website Online.
The road ahead
The question of whether everyone will actually miss out on the electricity tax reduction remains uncertain. The 2025/26 budget hasn't been approved yet, and now it's the Bundestag's turn. In the parliamentary process, the tax reduction for all could still be decided. To achieve this, money would need to be redirected elsewhere - it's about many billions of euros.
A reduction would provide relief not only in terms of electricity costs, but also make heat pumps or electric cars more appealing.
Our sources:
- News agencies DPA and Reuters
- Coalition agreement of CDU/CSU and SPD
- Consumer Center NRW
- Comparison portal Verivox
- EU directive for energy taxation
Enrichment Data:
- The current proposed electricity tax reduction for private households in Germany has essentially been scrapped, as the 2025/26 draft budget only contains provisions for permanent tax reductions to manufacturers and agricultural sectors, while households and small businesses are excluded. This is a clear violation of the coalition agreement's pledges[3][2][5].
- The German government has maintained the electricity tax for households at 2.05 cents per kilowatt hour, instead of reducing it to the European minimum (around 0.05 to 0.1 cents per kWh), citing budgetary constraints. This decision has sparked backlash from industry experts, opposition parties, consumer advocates, and major electricity suppliers like Eon, who call the government's move a "fundamentally wrong signal" for energy transition efforts and affordability[4][5][3].
- If the reduction does not occur, households will continue to shoulder high electricity costs, with German households currently paying an average electricity tax of 2.05 cents per kWh, adding up to over €40 per person annually purely from this tax[3][5].
- Politically, this decision has caused the first major rift within the governing coalition, undermining trust among voters and coalition partners[2][3].
- Critics argue that maintaining a high electricity tax relative to other fossil fuels (e.g., natural gas taxed at 0.55 cents per kWh) hinders energy efficiency and encouraging sustainable electricity consumption[5].
- By excluding households from relief measures, continued social inequality in energy costs is exacerbated, especially during periods of high energy prices[1][3].
- Despite the initial promise in the coalition agreement to reduce electricity taxes for both businesses and consumers, only specific sectors of businesses will benefit, as homeowners are still waiting for relief, with the federal government's decision being based on tight budget constraints.
- As a result of the federal government's decision to label the electricity tax reduction as subject to funding reservation, consumers are not expected to see any savings, meaning the high electricity costs for households persist, as they will not receive the promised relief.
