Editor in chief at IamExpat Media
After eight straight quarters of rising energy prices, there is some hope on the horizon for households in Germany: according to a new report by price comparison site Verivox, energy costs fell in the first quarter of 2023 for the first time in nearly two years, thanks in part to government relief measures.
Verivox looked at the price of energy for a three-person so-called “model household” between January and March 2023 and found that costs for heating, electricity and fuel fell by an average of 18 percent.
Accordingly, while an average household was projected to spend 7.163 euros on energy per year in the fourth quarter of 2022, by the first quarter of 2023 that figure had fallen to 5.889 euros - amounting to a saving of 1.274 euros per year for an average family or household.
The decrease can be explained by a number of factors: not only have wholesale prices fallen as the global market recovers from the instability caused by the Russian invasion of Ukraine, but also government-imposed measures are holding back the price of energy.
“With the receding fear of supply bottlenecks, wholesale prices for energy have fallen continuously in recent months,” Thorsten Storck, an energy expert at Verivox, said in a statement. “As a result, many energy suppliers have lowered their prices. Households that cannot switch to cheaper offers due to contractual deadlines are now benefiting from the state price caps.”
Since January, households in Germany have gained from the government’s electricity price cap - which caps electricity costs at 40 cents per kilowatt hour for the first 30.000 kilowatt hours used. The gas price cap, which caps prices at 12 cents per kilowatt hour, came into effect in March 2023 but applies retroactively to January and February’s bills as well.
Verivox said that without these measures throttling prices, the average household would be paying around 6.604 euros per year for their energy in the first quarter of 2023 - a decrease of 8 percent compared to the fourth quarter of 2022.
However, the drop in prices won’t be immediately noticeable on most people’s utility bills. As Verivox explains, most people are still being supplied with energy that suppliers bought last year, when prices were still sky high. “Many basic suppliers buy very long-term and did so when prices were very high,” Verivox CEO Daniel Puschmann told the Augsburger Allgemeine Zeitung. “Those contracts with high prices are still on the books now.”
Energy companies are therefore unlikely to pass cost reductions onto their customers if they have existing contracts, but Verivox says that customers seeking out a new supplier might be able to take advantage of the currently low market prices and get a better deal.