energy
Abolition of the EEG surcharge only dampens price increases
Wind turbines turn on the North Sea coast off Sylt. The Bundestag agreed to abolish the EEG surcharge. Photo: picture alliance / dpa
© dpa-infocom GmbH
Since the year 2000, electricity customers have financed the promotion of green electricity expansion with a surcharge. Now the surcharge will be abolished – but that’s not the big liberation for electricity customers.
Electricity customers are to be relieved from the summer with a measure worth billions – but is it just a drop in the bucket in the end?
On Thursday, the Bundestag approved the abolition of the EEG surcharge as of July 1st. But what is the bottom line? From the point of view of energy experts, associations and comparison portals, not much.
The levy was introduced in 2000 to finance the promotion of wind or solar systems. So far, the surcharge under the Renewable Energy Sources Act (EEG) has been 3.72 cents per kilowatt hour. It had already been reduced at the beginning of the year with the help of grants from the federal budget. Actually, the levy should not be abolished until the beginning of 2023, but the coalition preferred this because of the rapidly increasing energy costs. This is intended to relieve consumers and companies that have previously paid the full levy – companies that use high electricity costs only have to pay a reduced levy.
EEG account with billions in the plus
By reducing the surcharge to zero on July 1, the federal energy and climate fund will be charged around 6.6 billion euros in the future, according to the draft law. But the question is when exactly. Because the EEG account is currently in the billions. Remuneration and sales proceeds for renewable electricity are posted to the account. So far, the EEG surcharge has financed the difference between expenses and income – between guaranteed remuneration for the producers and the proceeds achieved on the electricity exchange. However, electricity prices on the exchange have risen sharply. From July 1st, no EEG surcharge will be levied. Loss of income as a result will now be paid from the energy and climate fund – provided the EEG account balance requires this, as the draft says.
But what does the abolition of the surcharge on the electricity bill mean for consumers? The parliamentary state secretary in the Ministry of Economics, Oliver Krischer (Greens), spoke of the greatest reduction in electricity prices in recent decades for people in Germany. Finance Minister Christian Lindner (FDP) wrote on Twitter that the abolition of the levy would relieve the “broad center” of the country by 6.6 billion.
The levy is an essential part of the electricity bill, along with taxes, production costs and network charges. The prices that electricity suppliers have to pay for the purchase of electricity have risen to unprecedented levels in the past few weeks and continue to rise, said Kerstin Andreae, head of the Federal Association of Energy and Water Industries (BDEW). «They will also affect the energy costs for household customers. The abolition of the EEG surcharge alone cannot cushion this.”
Less strong increase in electricity prices
Under normal circumstances, lowering the EEG surcharge would lower the electricity price if the price reductions are passed on to consumers, said energy expert Claudia Kemfert from the German Institute for Economic Research. A household of four could save up to 300 euros a year. “However, electricity prices on the stock exchange have increased due to rising coal, gas and CO2 prices, and fossil fuels make electricity expensive.”
According to Kemfert, electricity companies would pass on this price increase disproportionately, so that the reduction in the EEG surcharge would only lead to a less pronounced increase in electricity prices. “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 the price of electricity.” Only a faster expansion of renewable energies would have the effect of lowering electricity prices. DGB board member Stefan Körzell said: “For many, the elimination of the levy is just a drop in the ocean, especially for low-income earners.”
Abolition of the levy is not a liberation
Also from the point of view of comparison portals, the abolition of the levy is not the great liberation. According to Steffen Suttner, Managing Director Energy at Check24, it mitigates the sharp rise in energy costs only slightly. “The abolition of the EEG surcharge only dampens the strong increase in electricity prices this year,” said Thorsten Storck, energy expert at Verivox.
Reiner Holznagel, President of the Taxpayers’ Association, said that the EEG surcharge will soon no longer have to be paid, which is initially good news for electricity customers. In the second half of this year alone, a family of four will save around 90 euros on their electricity bill: “But it is also true: the bottom line is that there is no real relief for citizens and companies because the costs of promoting renewable energies are still have to be raised.” In the future, the taxpayers would pay for it.
There are legal requirements to ensure that the reduction in the surcharge is passed on from the energy suppliers to the consumers. According to the draft law, it is not about increasing the “margins of electricity suppliers”. BDEW boss Andreae said that the reduction would be taken into account one way or another when the companies recalculated the prices. The obligation to pass on the reduction is therefore assessed as uncritical. However, the ban on offsetting the price reduction directly with increased procurement costs as of July 1 leads to additional work if companies would have to carry out a price change anyway due to the drastically increased procurement costs. “It will also be rather confusing for customers if the price of electricity is changed twice in quick succession.”