German Upper House approves price cap for electricity, gas


The German Bundesrat, or Upper House of Parliament, has approved the so-called energy price brakes that will cap electricity and gas prices in Europe’s largest economy to cushion the impact of high prices on consumers and businesses.

“The price breaks for gas, electricity and district heating are coming! It’s a good thing that the Bundestag and Bundesrat decided that. We will also support those who heat with oil or pellets, for example… We leave no one alone,” Chancellor Olaf Scholz said in a tweet on Friday.

Further details are, however, still pending, reports the media agency. The price brakes are to apply from March 2023, but consumers also receive a one-time payment in January and February.

In order to give the incentive to reduce consumption amid the energy crisis, gas and electricity prices are only capped at 80 percent of average past consumption.

To finance the energy price brakes, the German government is providing up to 200 billion euros through the Economic Stabilization Fund, which was originally established to distribute state aid during the Covid-19 pandemic. Inflation relief packages totaling 95 billion euros were also passed this year.

Measures include short-term financial support to pay heating bills during winter and the reduction of the value-added tax (VAT) rate on gas and district heating from 19 percent to 7 percent.

Despite the relief measures, consumer prices for energy products were still 38.7 percent higher in November than in the same month a year ago.

After peaking at 10.4 percent in October, the inflation rate declined to 10.0 percent last month, according to the latest official data.


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