Background information

Due to the inflation resulting from the war in Ukraine, the federal government has issued a total of three relief packages during 2022. The last relief package (adopted by the federal government in September 2022 and by the German parliament in December 2022) is the biggest one in terms of financial aid. It is worth €65 billion that are to be used for a variety of measures. As prices for gas and electricity are rising steeply, the federal government, amongst other things, decided to implement a gas and electricity price brake to unburden citizens and companies alike.

Content of measure

In general, the gas and electricity price brakes cap the prices for both, citizen and companies from 1 January 2023 onwards. Regarding gas prices, the federal government decided that the gas price is capped at 12 cent per kilowatt hour. This price cap is applicable to private households as well as small and medium-sized households using less than 1.5 million kilowatt hours of gas per year. For users of district heating, the capped price is 9.5 cents per kilowatt hour. However, this lower price applies only to 80% of the annual consumption. Latter is measured against the annual consumption forecast pre-calculated in September 2022. The electricity price for private consumers and small businesses was capped at 40 cents per kilowatt hour. The capped electricity price also applies to 80% of the regular annual demand (measured against the previous year).

Be it with regard to gas or electricity consumption, Individuals and small and medium-sized companies need to pay the regular market price for any consumption exceeding the 80% threshold. In this way, the federal government wants to foster energy saving.

For larger industrial companies, the federal government decided to cap the net working price for gas consumption at 7 cents per kilowatt hour. The capped price applies to 70% of their previous gas consumption. Hospitals can also make use of this rule that came into effect on 1 January 2023. When it comes to electricity consumption, the cap is 13 cents per kilowatt hour for the first 70% of their previous annual consumption. This cap applies to medium-sized and large companies with more than 30,000 kilowatt hours of annual consumption. For any excess consumption (be it with regard to gas or electricity), companies will have to pay the regular market price.

Use of measure

No data available.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Applies to all businesses	Applies to all citizens

Actors and funding

Actors	Funding
National government	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Consulted	Consulted
Form	Any other form of consultation, institutionalised (as stable working groups or committees) or informal	Any other form of consultation, institutionalised (as stable working groups or committees) or informal

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: Peak or cross-sectoral level

Involvement

The federal government set up an independent expert commission on 23 September 2022. The commission was made up of employer, union and research representatives. It was formed to come up with assessments of the probable energy shortages resulting from the lack in Russian gas and electricity supply as well as judging possible price developments for private consumers and companies. Based on their assessments, the experts were asked to develop solutions to stabilise the situation. The different social partners were also asked to provide their position papers and comments during the parliamentary hearings before adopting the needed legal changes.

Views and reactions

The German Trade Union Confederation (DGB) welcomed the introduced price brakes. However, union confederation had hoped that some caps would have been set at a lower price or price caps would have been made conditional for employers (guaranteeing to safeguard employment for a certain period of time). The Federation of German Industries (BDI) similarly welcomed the price brakes but criticised that companies should have been disburdened more strongly and also warned that EU regulations needed to be changed in order for companies to make use of the introduced advantages

Sources

• 31 October 2022: Final report of gas and energy expert commission (www.bmwk.de)
• 06 December 2022: DGB position paper on price caps (www.dgb.de)
• 06 December 2022: BDI position on price brakes (www.bundestag.de)
• 01 January 2023: Gas and electricity price brakes (www.bundesregierung.de)
• 18 October 2023: Extension of price brakes (www.bundesregierung.de)