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Electricity meter in an apartment building:

Photo: Bernd Wüstneck / dpa

Electricity and heating will become more expensive for many people from January onwards – but it is still unclear by how much. Federal Chancellor Olaf Scholz (SPD) has announced in the Bundestag that the electricity and gas price brakes will be phased out in 2024. In addition, there are other factors that are likely to increase prices. Almost two-thirds of people in Germany are currently worried about rising energy prices.

Until the end of the year, the price for 80 percent of private household consumption is capped. The limit is 40 cents per kilowatt hour for electricity and twelve cents per kilowatt hour for gas. Throughout Germany, electricity and gas tariffs are available again that are below the upper limits, Scholz said, explaining the decision not to extend the price brake.

In a survey for the comparison portal Check24, 24 percent of respondents stated that their contract with a supplier was still above the electricity price brake; 14 percent said they were currently paying a price above the gas price brake for gas.

However, the calculation of another comparison portal from the weekend showed that the difference due to the price brakes is currently small. If they were to be abolished, a model household with a consumption of 20,000 kilowatt hours would have to pay 26 euros more per year for gas, and one euro for electricity, according to the portal Verivox.

Slight difference – until March

This is due to the fact that electricity and gas prices for new customers have fallen significantly in recent months. Prices are also expected to go down for many basic suppliers. Scholz assured: "Should energy prices nevertheless rise unexpectedly dramatically again, we will be able to act at short notice at any time."

The energy price brakes were financed by the Economic Stabilisation Fund (WSF), which is endowed with up to 200 billion euros. However, the Federal Constitutional Court has declared such special funds in addition to the regular budget to be inadmissible.

The WSF was also to provide a subsidy from the state to reduce grid usage fees in the amount of 5.5 billion euros. The government has not yet commented on this. Grid usage charges account for more than a fifth of electricity costs. According to calculations by Check24, network fees could rise by more than 100 euros per year for a household if state support were to be discontinued.

What is missing from all these calculations is the evolution of VAT. It had been lowered to seven percent in October 2022 to relieve citizens of costs. It will soon be more expensive here: The tax on gas supplies and district heating is likely to be raised again to 19 percent as early as January, but no later than the beginning of March.

The head of the Federation of German Consumer Organisations (vzbv), Ramona Pop, sharply criticised the end of the energy price brakes: "The federal government's U-turn is costing consumers a lot of money. For example, if you had to conclude an expensive energy contract in March of this year, you will be stuck in the minimum contract period even beyond the turn of the year." These households, especially those on low incomes, are unlikely to face financial hardship in winter. Pop called for other solutions to relieve households in a targeted manner.

It's best to check contracts right away

According to the Federal Statistical Office, 5.5 million people were unable to heat their homes adequately last year due to the sharp rise in energy prices. 6.6 percent of the population was affected, twice as high as in 2021. According to the study, people in single-parent households, families with two adults and at least three children, and people living alone were particularly affected.

In the survey for Check24, 32 percent of respondents said they were a little worried about electricity and gas prices. 31 percent are "very worried". Only 13 percent of those surveyed are little or no worried. 18 percent were undecided.

The Saxony-Anhalt Consumer Advice Centre advises to check contracts for electricity and gas and, if necessary, to change providers. Anyone who finds that the current contract is more expensive than the price brake of 40 cents per kilowatt hour of electricity and more than 12 cents per kilowatt hour of gas should terminate the contract as soon as possible. Currently, prices on the wholesale markets are falling. Numerous providers offer prices below the price brake. It is therefore worthwhile to put an end to the often expensive basic service.