Study Finds Potential Annual Savings of Over 200 Euros for Four-Person Families on Electricity Bills
Homeowners with four family members stand to cut 220 euros on their electricity bills in the near future.
In a promising move aimed at easing the financial burden on consumers, the German government is planning reforms to electricity pricing. According to a study by the Institute of the German Economy (IW) in Cologne, a four-person family with an annual consumption of 4000 kilowatt-hours could save approximately 220 euros per year.
The proposed electricity price reform encompasses reducing the electricity tax to the European minimum for all consumers and eliminating several levies. These measures, as indicated by the IW, could significantly relieve many consumers. The savings would also be amplified by a decreased VAT burden.
The study assumed not only a reduction in electricity tax but also the abolition of three specific levies: the offshore network charge, the combined heat and power levy, and the levy under the electricity grid charge regulation. The reform could also benefit businesses, with small and medium-sized enterprises potentially saving 4.6 cents per kilowatt-hour and large industrial conglomerates saving around 4.2 cents.
While these measures offer immediate relief, the IW cautions that they are not a long-term solution. The reform merely redistributes costs from consumers to the federal budget, as explained by study author Thilo Schaefer, an energy economist. Schaefer emphasized the need for a more efficient German electricity system, focusing on increased production of renewable energies, storage facilities, and adjustable power plants, adjusting to the growth in demand.
In addition to reducing electricity bills, the reform aims to streamline the cost allocation for grid infrastructure, which has been under pressure due to the expansion of renewable energy. The German regulator (BNetzA) proposes broadening the financing base by requiring power producers to pay either usage-based fees or a basic grid fee. This change would distribute grid costs more equitably among users, thereby easing the strain on consumers.
Source: ntv.de, hny/AFP
- Electricity Price
- Electricity Supply
- Federal Government
- Institute of the German Economy Cologne
The Federal Government's proposed electricity price reform, as indicated by the Institute of the German Economy (IW), could offer annual savings of approximately 220 euros for four-person families, and it may also benefit businesses by reducing vocational training costs through a more efficient allocation of grid infrastructure costs. This cost allocation reform, suggested by the German regulator (BNetzA), aims to require power producers to pay usage-based fees or a basic grid fee, thereby streaming the costs more equitably among users and potentially reducing personal-finance and business expenses related to electricity supply. The reform, however, should be seen as a short-term measure, as the IW emphasizes the need for a more holistic approach to addressing long-term issues in the German electricity system, such as increased production of renewable energies, storage facilities, and adjustable power plants.
