Abolition of the EEG surcharge: are the electricity bills going down now?


Status: 04/28/2022 12:06 p.m

The Bundestag is voting today on the abolition of the levy on the electricity bill. What are the effects of the abolition for end users?

By Lilli-Marie Hiltscher, tagesschau.de

The federal government wants to relieve electricity customers because of the sharp rise in energy prices. In order to achieve this, the Bundestag is today discussing the abolition of the EEG levy on the electricity bill as of July 1 of this year. Energy companies should pass on the falling costs in full to end consumers. But experts and associations are skeptical as to whether the multi-billion dollar measure will result in lower prices.

What is the EEG surcharge?

The levy under the Renewable Energy Sources Act (EEG) finances the expansion of green electricity systems. The aim is to promote the energy transition and the switch to renewable energies such as hydropower, wind energy, solar energy and biomass. The EEG surcharge is currently 3.72 cents per kilowatt hour; it was lowered at the beginning of the year with the help of subsidies from the federal budget. The EEG surcharge reached its previous record high in 2017 at 6.88 cents per kilowatt hour of electricity.

Why do consumers pay the EEG surcharge?

The difference between the guaranteed remuneration for the producers of green electricity and the proceeds achieved on the electricity exchange is compensated for by the levy. This difference between the expenditure for compensation payments and the income from marketing proceeds is distributed to all electricity consumers. The EEG surcharge is therefore part of the bill for all electricity customers, exceptions apply to electricity-intensive branches of industry. It was introduced back in 2000.

Why should the EEG surcharge be abolished?

The Bundestag is voting today on the abolition of the levy. It is part of a broad package of measures with which the coalition wants to relieve households of the sharp rise in energy prices. In the coalition agreement, the end of the levy was only planned from January 2023.

The loss of income caused by the reduction of the EEG surcharge to zero cents per kilowatt hour is to be reimbursed by the federal government and the special fund “Energy and Climate Fund” (EKF). According to the federal government, reducing the EEG surcharge to zero from July 1 will cost around 6.6 billion euros.

How much are electricity prices rising at the moment?

According to the comparison portal Check24, electricity prices for end consumers were at a very high level in April: The average price is currently around 41.1 cents per kilowatt hour. This corresponds to an increase of 36 percent compared to the same month last year.

According to Check24, the basic electricity suppliers have already increased their prices or announced increases in a total of 1,202 cases. According to the comparison portal, around 8.4 million households in Germany are affected. A model household with a consumption of 5000 kilowatt hours will have additional costs averaging 478 euros per year. And further increases will follow in the coming months: “For April, May, June and July, basic electricity suppliers have already carried out or announced price increases in 217 cases – at the top over 100 percent,” says Check24.

How should consumers benefit from the reduction?

To ensure that the end of the EEG surcharge is actually passed on to consumers, electricity suppliers will be obliged by law to reduce electricity prices accordingly as of July 1, 2022. According to calculations by the federal government, a family of four could save around 300 euros per year compared to 2021.

What are the reactions to the plans?

Experts and associations do not assume that the abolition of the EEG surcharge will bring any noticeable relief for consumers. “The fact that the EEG surcharge will soon no longer have to be paid is good news for electricity customers: A family of four will be relieved of their electricity bill by around 90 euros in the second half of this year alone,” said Reiner Holznagel, President of the Federal Government the taxpayer to the dpa news agency. “But it is also true that the bottom line is that there is no real relief for citizens and companies because the costs for the promotion of renewable energies still have to be raised.”

Claudia Kemfert sees it similarly: “It is unlikely that the EEG surcharge will currently lead to falling electricity prices because the war situation is causing the prices for fossil fuels to explode and with them electricity prices,” said the energy expert from the German Institute for Economic Research dpa. Because the EEG levy is only part of the electricity bill, along with taxes, procurement and distribution costs and grid fees.

How is the electricity price made up?

The electricity price that end customers have to pay includes not only the administrative costs of the electricity supply company, but above all the price for the procurement and sale of electricity and fees for using the electricity grids. Added to this are sales tax, electricity tax, the EEG surcharge and a concession fee.

Procurement costs in particular have risen significantly for electricity suppliers: According to Check24, one megawatt hour on the electricity exchange cost an average of 143 euros in April of this year. A year ago, the price for a megawatt hour was just 52 euros. As a result, the procurement costs on the electricity exchanges rose by 175 percent.

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