Germany abandons price freeze for energy sources. According to the German Finance Minister, the maximum prices for gas and electricity in Germany will be "lifted at the end of the year."
This statement, made on Friday in an interview with Deutschlandfunk radio, means that consumers are likely to see an increase in their electricity bills compared to the current limit of €0.40 per kWh for electricity and €0.12 per kWh for gas.
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Germany abandons price freeze for energy sources
Freezing prices were introduced last year to help consumers and businesses cope with rising prices caused by the conflict in Ukraine. As recently as November, the Bundestag agreed to extend the price restriction until March 31.
Funding was provided through the Economic Stabilization Fund (WSF) with a volume of €200 billion, initially created by the government to assist companies and cover health protection measures after the outbreak of the coronavirus pandemic.
Also at risk of cancellation is the Bundestag-approved reduction of VAT on gas heating by the end of March.
Why are the price ceilings being lifted?
The German constitution limits the budget deficit to 0.35 % of GDP. This so-called "debt brake rule" can only be violated in exceptional cases, and it was suspended during the pandemic.
Earlier this month, the Constitutional Court ruled that Chancellor Olaf Scholz's government acted unlawfully by redirecting funds originally intended to combat the pandemic to climate needs.
Following this shocking decision, a representative of the chancellor stated that "all special funds must now be reviewed and assessed."
What has been the reaction?
The SPD, one of the main parties in the ruling coalition in Germany, criticized the decision to lift the price freeze.
"By freezing prices, we provide millions of households and companies with protection against excessively high energy prices", said Matthias Miersch and Verena Hubertz, deputy heads of the parliamentary group.
Kerstin Andreae, the chairwoman of the German Association of Energy and Water Industries, also called this decision "misguided."
"For the coming winter months, extending the contract would have been an important signal of stability and security for consumers", she told taggeschau.de in an interview.
The German Federation of Consumer Organizations stated that the "current chaos around the federal budget" should not happen at the expense of consumers. "Therefore, private households will face a significant price increase," said Executive Director Ramona Pop.
Related topics:
The lifting of the price ceilings for energy sources in Germany could lead to significant increases in electricity bills for consumers. This decision in politics has been met with criticism from parties such as the SPD, who argue that freezing prices provides protection against excessively high energy prices.
The German Federation of Consumer Organizations also expressed concerns, stating that consumers should not bear the brunt of the current chaos around the federal budget. These issues highlight the ongoing importance of politics in addressing energy pricing and its impact on consumers.
