Electricity prices in Germany
Big jump in prices for basic services: More than 100 municipal utilities will increase the tariff in 2023
The energy supplier Rhein-Energie is raising prices. Everywhere in Germany, the tariff for the basic electricity supply could soon increase. But why exactly are prices rising and is there hope for falling costs?
This article first appeared on RTL.de
From January 2023, electricity prices will go through the roof again. The loyal customers of the Stadtwerke are now affected. Because with them, the price of electricity can almost double.
Strong price jump for basic services
Almost 100 basic electricity suppliers have already announced price increases for November, December and January, some by more than 100 percent compared to the price at the end of September, said Edgar Kirk from the comparison portal Check24 when asked by RTL.
For example, the energy supplier Rhein-Energie, which mainly supplies the city of Cologne with electricity and gas, is raising prices sharply. Even for long-standing customers, the consumption prices almost doubled. The energy price per kilowatt hour increases from 30.50 cents to 54.98 cents.
Customers who have concluded a contract with a fixed term are in a slightly better position. You continue to pay the price agreed when the contract was concluded until the end of the term.
Germany: why electricity prices are rising
The purchase price for electricity has fallen sharply in recent weeks. “The average exchange electricity price on the spot market in the past few weeks was around 108 euros per megawatt hour (MWh). In mid-August it was a record value of 579 euros per MWh. For comparison: in 2019 (before the corona and energy crisis) it was average 37 euros per MWh,” says electricity price expert Kirk. This means: the price has fallen, but is still well above the old “normal” before the energy crisis.
As a result, Rhein-Energie is currently unable to avoid the general market developments. “Due to our long-term procurement, on the one hand our prices have risen much later, on the other hand they are now reducing the prices somewhat from January. Of course, this is an immense burden for all of us at the moment,” explains Rhein-Energie board member Achim Südmeier in an interview with the “Kölner Stadtanzeiger”.
This is also confirmed by Edgar Kirk from Check24: “The price development on the electricity exchanges always reaches the end consumer with a delay. Many suppliers, especially the default suppliers, buy at least part of their electricity quantities for a very long time. Depending on the purchasing strategy, there are very different purchase times for the suppliers and accordingly they have to pass on very different prices to their customers at different times. It can also happen that the exchange electricity prices are already falling, but suppliers are increasing prices for end customers.”
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Is there hope for falling prices?
The question that will interest many consumers in Germany: What next for electricity prices?
“Future developments are difficult to predict. In our electricity price index for 2,000 kWh consumption, we have consistently averaged over 40 ct/kWh since January. If we assume that terms of twelve months are the norm for electricity contracts and that basic suppliers are all six weeks, then by the beginning of next year at the latest, the majority of electricity consumers will have contracts in which they pay more than 40 ct/kWh and then benefit from the electricity price brake,” Kirk explains the situation on the electricity market.
Sales Director Achim Südmeier from Rhein-Energie also explains in an interview with the “Kölner Stadtanzeiger” that the electricity price is not only related to the war in Ukraine: “In the past year there were many other factors that drove up energy prices, for example Shut down power plants in France, weather influences, difficult fuel transport due to low water in rivers and generally a lot of uncertainty contribute to the high prices.” But the energy manager also promises that as soon as Rhein-Energie sees an opportunity for relief, it will use it.