Abolition of the EEG surcharge
How Habeck can curb electricity costs
2/4/2022 8:06 p.m
Electricity prices are going through the roof – for many households, winter is becoming an ever greater financial burden. Therefore, the EEG levy should be abolished. However, experts doubt that the relief will actually reach the end customer.
It should actually be a billion-dollar relief for electricity customers. But now the planned abolition of the EEG surcharge is increasingly becoming an emergency brake. The federal government wants to bring them forward if possible in order to cushion the explosion in electricity costs, which many citizens will soon no longer be able to afford. But experts say: That may be too short-sighted. “A reduction or abolition of the EEG surcharge is no guarantee for falling electricity prices,” says Claudia Kemfert, an energy expert at the German Institute for Economic Research.
The taxpayers’ association would like more honesty: “Even an early abolition of the EEG surcharge in the middle of the year would not even begin to compensate for the burdens that private households incur as a result of the high CO2 prices, with which the state spent around 12.5 billion euros last year alone taken,” says President Reiner Holznagel.
The previous plan of the traffic light is to abolish the EEG levy on the electricity bill on January 1, 2023. The levy to promote green electricity under the Renewable Energy Sources Act (EEG) will then be financed from the federal budget. However, there are increasing signals that the surcharge is to be abolished earlier in view of rising energy prices. Finance Minister Christian Lindner promised this in the middle of the year. Economics and Climate Protection Minister Robert Habeck said: “If it is possible to bring forward the abolition of the EEG surcharge, then that should be tried.”
Little relief
The abolition of the surcharge will only dampen the rise in energy prices. It is already clear that the EEG surcharge will be reduced this year by a federal subsidy of almost 3.3 billion euros. According to calculations by the taxpayers’ association, this amounts to less than one cent per kilowatt hour. A complete cancellation in the second half of the year would therefore put 42 euros more in the pockets of a single household this year. According to the calculations, a family of four would have 89 euros more. The taxpayers’ association assumes that a family consumes 4000 kilowatt hours of electricity per year and a single person 1900 kilowatt hours.
But what does that mean for the bottom line for the electricity bill? “Since the electricity prices on the exchange are very high at the moment, it is to be expected that the electricity prices will not fall,” says Kemfert. “But at least maybe a very sharp rise can be avoided.” Kemfert proposes that households with a per capita reimbursement of CO2 income should be relieved, especially households with low incomes.
The Federal Association of Consumers also demands that the amounts paid in for CO2 pricing be paid back to households in full. That is more important than the abolition of the EEG surcharge.
Who will benefit from the abolition?
The question is also whether the electricity suppliers would pass on the abolition of the EEG surcharge to the customers. “We know from the past that price-reducing factors are passed on to consumers less quickly or not at all, whereas price-increasing factors are passed on to consumers quickly and often disproportionately,” says Kemfert.
Green parliamentary group leader Julia Verlinden emphasized that the relief must really reach the citizens. “That wasn’t always the case when the EEG surcharge was reduced in the past. We have to pay special attention to that in the specific design.” In general, the massive price fluctuations made it clear that the switch to renewable energy had to be accelerated enormously in order to ensure a clean and affordable energy supply.
Thorsten Müller, scientific director of the Würzburg Foundation for Environmental Energy Law, told the “Spiegel” that initially only the providers benefited from the relief. According to the current legal situation, the state cannot force them to pass the reduction on to customers one-to-one.
electricity tax and VAT
If you want to ensure that the relief actually reaches the end customer, you have to take a closer look at electricity tax and value added tax, says Simone Peter, President of the Federal Association for Renewable Energy (BEE). Consumer advocates and the taxpayers’ association are also calling for this. But even if the electricity tax is reduced as far as EU law allows and a VAT of seven percent is applied to electricity, the federal government will still make a lot of money from the CO2 price, says Holznagel.
The abolition of the EEG surcharge is to be paid for via the energy and climate fund, which has an additional 60 billion euros available through the controversial supplementary budget. But the question is what exactly does that cost – 10 billion euros a year, 15 billion? Because the amount of the surcharge, which has already been reduced to 3.72 cents per kilowatt hour with tax money, also depends on the further development of the electricity price on the exchange.