Gas is twice as expensive as last year, the price of electricity is rising – economy

Anyone looking for a new energy supplier these days, for example due to moving or because a contract is expiring, experiences a pretty rude awakening. In the year to date, households have paid an average of 13 to 14 cents per kilowatt hour of gas, almost twice as much as the average for the previous year. That reports the Federal Association of Energy and Water Management (BDEW) based on current tariffs. Gas is by far the most important fuel for heating in Germany.

The association points out that the suppliers’ procurement costs have risen sharply in recent months. “Since the start of the Russian invasion of Ukraine, the situation on the energy markets has deteriorated again.” Wholesale gas is almost five times as expensive as it was in early 2021, says BDEW boss Kerstin Andreae. Although many suppliers buy gas years in advance, the price for private individuals also consists of network charges and taxes. Nevertheless, Andreae warns: “The longer the price level remains high, the more the wholesale prices will be reflected in the tariffs and will also influence them in the long term.”

Germany’s largest energy supplier Eon emphasizes that the problem is a possible shortage of oil and, above all, gas. The EU has not yet boycotted gas imports from Russia; However, there is a risk that Moscow could stop deliveries on its own. “A gas embargo or delivery stop would exacerbate the problem,” warns Eon boss Leonhard Birnbaum in his previously published speech at the general meeting next week.

The situation is even less transparent for households that rent their homes. As a rule, they do not know at what prices their landlord purchases gas or oil for heating. The capers on the energy market are therefore only likely to show up in the heating bills that tenants are expecting in the middle of this year and especially in the middle of next year. Rolf Buch, head of Germany’s largest housing company Vonovia, already says: “We advise our tenants so that they create reserves and increase the advance payments for energy.”

So far this year, electricity is 15 percent more expensive than the previous year’s average

But the expensive gas also indirectly increases the price of electricity. Because how much money freshly generated electricity costs on the exchange depends on the production costs of the last expensive power plant that was just needed for the supply. It is not uncommon for these to be gas piles. As a result, private households have been paying a good 37 cents per kilowatt hour of electricity over the year to date. This is 15 percent more than the previous year’s average, reports the BDEW.

The union affiliated Hans Böckler Foundationthat expensive energy is a particular burden for households with comparatively low incomes: some of them have to do without other things so that they can still pay for heating, electricity or fuel. “We are seeing more and more clearly the social explosive nature of the price development over the past few months,” warns Malte Lübker from the Foundation’s Institute for Economic and Social Sciences.

In order to curb the price increase, the Bundestag decided at the end of April that electricity customers would no longer have to pay the EEG surcharge from July. This fee for the promotion of renewable energies has so far made a good 3.7 cents per kilowatt hour of electricity. Instead, the federal government wants to pay for the funding with revenue from CO₂ emission rights and grants. Of course, this alone “cannot cushion the extremely increased procurement costs,” says Andreae. The BDEW therefore calls for the federal government to lower the electricity tax or the VAT rate on electricity as the next step.

In addition, every kilowatt hour saved helps, as Federal Minister of Economics Robert Habeck emphasized. “Saving energy not only lowers the costs for consumers,” Andreae advertises, “but also helps our gas storage tanks to be filled, which means that bottlenecks can be taken care of.”