This is how subsidies work for gas, electricity, heating oil and wood pellets

In addition to price brakes for gas and electricity until 2023, the Bundestag also decided on hardship cases for private households heating with heating oil, wood pellets and liquid gas. According to this, the central government is going to create a hardship fund with the states, from which private households heated by pellets, heating oil or liquid gas should be supported this year. For this purpose, the central government provides a maximum of 1.8 billion euros.

Relief for oil, pellets and LPG only on request

Applications must be submitted for relief for heating oil, wood pellets and liquefied gas, as opposed to the gas and electricity price break offered to users without use. States should take responsibility for this. According to the law, bills of private households can be taken into account for the period from January 1, 2022 to December 1, 2022.

The amount of relief is limited to a maximum of €2,000. Based on the system of gas and heat price break it should be calculated as follows:

  • 0.8 x (invoice amount – 2x reference price x order quantity).

That means only 80% consumption is compensated. In addition, the bill should be double what it was before the outbreak of war in Ukraine and the energy price crisis. The annual average value of the previous year for the respective fuel should be used as the reference price. However, a prerequisite for consideration is a minimum reimbursement of €100 for all of them.

Fuel charges must be confirmed by affidavit

The applicant must confirm the fuel charges through an affidavit. In multi-tenant apartments, the landlord must certify in writing that the funds have been sent to the tenants. Other enrollment requirements must be determined as part of a federal-state agreement. The federal states will have to pay the funds with proof of utilization to the central government by the end of 2025.

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Energy price brakes from 2023

On Thursday, the Bundestag approved laws on price breaks for gas and electricity in a roll-call vote. Both should apply from March 2023 to April 2024. In addition, suppliers must apply the price breaks for January and February 2023 retroactively.

This is how the gas price brake works

For gas, households and small businesses using less than 1.5 million kWh of gas receive a guaranteed total gas price of 12 ct/kWh for 80% of their forecast annual consumption in September 2022. Companies with a gas consumption of more than 1.5 million kWh per year receive a guaranteed net working price of 7 ct/kWh for 70% of their gas consumption in 2021, based on their consumption. Heat customers receive a guaranteed energy price of 7.5 ct/kWh for 70% consumption, based on September 2022 rebate.

This applies to the electric price brake

For electricity, households and small businesses using less than 30,000 kWh of electricity per year receive a guaranteed total price of 40 ct/kWh for 80% of their previous electricity consumption. The contractually agreed price applies to consumption above this “base quota”.

Companies with an annual electricity consumption of more than 30,000 kWh receive 70% of their current electricity consumption at a guaranteed net price of 13 ct/kWh. Taxes, duties and surcharges are extra.

So far, gas customers in particular have been relieved

So far, the central government has been subsidizing especially the purchase of gas. For this purpose, it reduced the sales tax on all gas consumption to 7% from October 2022 to March 2024. In December 2022, it will take up the advance for end-consumers of pipeline natural gas.

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Biogas plants are exempted from curtailment of revenue

Along with the electricity price brake, the Bundestag decided to reduce the income from electricity suppliers. The coalition made amendments this week specifically for suppliers of biogas plants. According to this, the reduction of electricity market revenue should only take effect from the estimated production per megawatt and should not be included in the calculation of the production of satellite combined heat and power plants. The Bundestag exempts most biogas plants from reducing electricity market revenues.

Energy price brakes and reliefs for 2023 have now been decided by the Bundestag and must be approved by the Bundesrat before they take effect on Friday.

See the Bundestag discussion on energy price brakes:

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