If a state suddenly has to make do with less money because it can no longer take on debt, then it simply has to set priorities. At least that’s what Christian Lindner, the finance minister from the FDP, has in mind. And that’s why he has already canceled the first state aid: the electricity and gas price brakes are due to expire on December 31st. “They will have to end.” The state, Lindner said on Deutschlandfunk at the weekend, does not have an income problem, but rather a spending problem. So expenses have to be eliminated.
But this first one already sparks arguments within the coalition. The SPD and parts of the Greens want to stick to it. “With the price brakes, we are giving millions of households and companies security against excessive energy prices,” says Verena Hubertz, deputy chairwoman of the SPD parliamentary group. With the announced supplementary budget for the current year, which is intended to once again identify an emergency, a good solution has been found for 2023. “The finance minister must now also create legal certainty for 2024,” demands Hubertz. However, there isn’t much time left for this – five weeks before the turn of the year.
The prices should actually remain capped over the winter
The two price brakes were decided on a good year ago, partly on the recommendation of a commission that had looked into the rise in gas prices. Since the beginning of the year, energy prices for households and businesses have been capped, at least for 80 percent of the previous year’s consumption. Since then, the price for gas has been limited to 12 cents per kilowatt hour and for electricity to 40 cents. The price for district heating was also capped. If households paid more for electricity, gas or heat in their respective tariffs, the state covered the additional costs. The aid was part of the “Doppelwumms” package, with which the coalition wanted to mitigate the consequences of last year’s energy crisis. And to do this, she resorted to the WSF economic stabilization fund, which was set up to ward off a Corona crisis. But since the Constitutional Court’s ruling on the climate and transformation fund, this approach has also become a thing of the past.
The federal government only decided to extend the price cap at the beginning of the month – originally until April 2024, and then until March 2024 after an intervention from Brussels. This means that the price cap should remain in effect at least through the winter. This is “insurance against unexpected risks,” the regulation said, and it strengthens consumer confidence.
This is also what advocates of an extension are now arguing. “Letting the price brakes expire before winter will cause additional uncertainty,” says DGB boss Yasmin Fahimi. “But exactly the opposite is needed.” However, the situation on the energy markets has now deteriorated significantly. The price of gas has fallen by two thirds within a year and the price of electricity by almost half.
There is a looming argument, but time is of the essence
This is also reflected in many energy suppliers’ tariffs. “Fortunately, today the prices for most contracts are below the price caps again,” says Green energy politician Julia Verlinden South German newspaper. “An extension could serve as a safeguard, but is not absolutely necessary at the moment.” The federal government must now quickly decide “whether the measure is still necessary and appropriate.”
But behind this question there is a much bigger one: How can a budget be drawn up for 2024 that does not require the resources from the previous funds, but is still constitutional? If the federal government does not use the emergency argument for this budget – and from Lindner’s point of view the energy prices do not support this – it will have to operate with less money. This means there is a looming argument about the right priorities, and time is becoming increasingly scarce. The adoption of a supplementary budget for 2023 will only take place before Christmas with shortened deadlines and special meetings, as drafts of the schedule show.
On top of that, Lindner has just thrown out his most important man for budget issues: the experienced State Secretary Werner Gatzer. He is blamed for the imaginative transfer of Corona billions to the climate fund.
Electricity customers are threatened with other hardships as a result of the financing gap, because not only were price caps covered by the WSF – but also a 5.5 billion subsidy to the network operators. This should keep the fees for the expansion and maintenance of the electricity highways stable. If this subsidy no longer exists, the billions will have to be raised by electricity customers. Unless the federal government sets other priorities.