An expert commission, tasked by the German government with implementing plans for a gas price cap, has agreed upon a two-stage solution: first, they are recommending that the state cover gas bills for households and businesses in December, before the price cap comes into effect in early 2023.
German government could pay people’s gas bills in December
After around 35 hours of deliberations, the Expert Commission on Gas and Heat “has drawn a series of recommendations for the federal government and passed them unanimously,” the Federal Ministry of Economics announced on Monday morning, shortly before the recommendations were presented to the public in Berlin.
The commission of experts is calling for a two-step approach to supporting people with their utility bills this winter. In the first step, the government will step in to cover people’s gas bill advance payments in December this year.
This would involve energy companies waiving the billing amount for December, with the lost revenue being reimbursed by the federal government in order to “partially compensate” customers for the high bills they can expect in January and February 2023. It essentially means the government will step in to pay people’s gas bills for one month. The commission explained that this step would help relieve consumers while the government prepared the ground for a price cap, which is more complicated to implement.
Gas price cap could apply on 80 percent of bills from March 2023
The second stage of the recommendation - the price cap - would therefore begin around March and would see prices capped on a portion of people’s gas bills. There would also be an additional hardship fund for families and individuals on lower incomes.
According to the commission, the so-called “basic quantity of gas” - around 80 percent of a household’s usual consumption - should be capped at 12 cents per kilowatt hour, while any consumption above this threshold would be charged at the market rate, to encourage people to limit gas usage.
Decision on price cap and special payments now rests with government
The package would apply until spring 2024 and could cost the federal government in excess of 90 billion euros. It is a central element of the government’s latest 200-billion-euro energy relief package.
The proposals will now be formally presented to Chancellor Olaf Scholz’s government. A final report, which might contain further suggestions, is expected sometime in the next three weeks, and it is up to the government to decide whether to implement the proposals in full, in part, or not at all.