Along with a gas price cap, Germany is seeking other ways to provide relief for consumers and businesses struggling with the soaring price of energy. On Wednesday, the federal cabinet approved a one-off energy payment for pensioners, while the Federal Economics Ministry announced a new subsidy to try to control electricity prices.
Pensioners in Germany to receive 300-euro energy payment
The federal cabinet on Wednesday signed off plans to give all pensioners in Germany a one-off payment of up to 300 euros to support them with their energy bills. The previous 300-euro energy payment was only given to workers in Germany, a decision that was widely criticised at the time.
People who are living in Germany and receiving either an old-age, reduced earnings capacity, or a survivor’s pension will be eligible for the new lump sum payment. According to Federal Employment Minister Hubertus Heil, the payment should reach all eligible people between December 1 and 15, 2022. It will be paid out automatically by the respective pension payment offices. It is subject to income tax but not social security contributions.
“The sharp rise in energy and food prices is a heavy burden on citizens,” Heil said in an official statement. “The welfare state stands by the people in these difficult times.”
The cabinet’s draft law also provides for an increase in the earnings limit for people with midi-job contracts. From January 1, 2023, the so-called “transition area” - within which social security contributions gradually increase from zero to full contributions - will be between 520,01 and 2.000 euros (up from 1.600 euros previously). This allows people to earn more money in these kinds of jobs before having to pay full social contribution rates.
Government coughs up 13 billion euros to stabilise electricity network fees
On the same day, Federal Economics Minister Robert Habeck announced that the government would step in to try to combat rising energy prices by paying 12,8 billion euros towards grid usage fees for the country’s four largest high-voltage energy transmission system operators (TSOs). These fees typically make up 10 percent of a customer’s utility bill.
Reuters reports that costs for the TSOs have more than tripled in recent months, from 5 billion to more than 18 billion euros. The state cash injection is therefore intended to ensure that network charges for customers and small- and medium-sized businesses do not also triple.
Following Habeck’s announcement, the TSOs announced that prices would be standardised across the whole country for the first time at 3,12 cents per kilowatt hour. This represents a small reduction for parts of the country served by the operator Tennet, including Lower Saxony, Schleswig-Holstein and parts of Hesse and Bavaria, but amounts to a modest increase everywhere else.
The government also announced plans to impose a windfall tax on the sometimes enormous profits being made by electricity producers.