Germany's energy price cap could be extended until April 2024
Federal Minister for Economic Affairs Robert Habeck has spoken in favour of the possibility of extending the price caps for gas and electricity until spring 2024, saying that there is still enough room in the government’s budget to do so and that it would act as a cushion for consumers.
Habeck calls to extend energy price cap to April 2024
In an interview with the Augsburger Allgemeine, the Green politician said that the electricity price cap and the gas price cap should remain in place until April 2024. “The price caps act like insurance against rising prices,” he said, explaining that an extension was already being discussed with the EU Commission.
Although current conditions point to the market rate for electricity and gas falling below the point the cap is currently set at, Habeck said the extension would work as a precautionary measure. “If prices fall and are under the caps of 40 cents for electricity or 12 cents for gas for private customers, then you don’t need the caps,” he said. “But if something should happen, the security will still be there in the coming winter.”
The price caps are legislated until at least the end of 2023, with the option to extend until April 2024. 200 billion euros has been set aside to fund the policy, and according to Habeck, only around 18 billion euros have been spent so far. However, according to the minister, the caps would expire at the end of the year as things currently stand.
EU and federal government’s approval needed for extension
The price caps were officially brought into effect in March 2023 but were applied retroactively to January and February 2023 as well. They cap energy prices at a maximum of 12 cents per kilowatt hour of gas and 40 cents per kilowatt hour of electricity for 80 percent of a household’s average annual usage, with the difference paid by the government.
However, the policy was a difficult one to get around the European Union, which stipulates that state aid can’t create unfair competition by subsidising key industries. It’s therefore not guaranteed that the EU will agree to an extension. The head of the Federation of German Industries reacted cautiously to Habeck’s statements, while the federal government has yet to agree to the proposal.