Thursday, 8 December, 2022

Germany primes energy price cap as bills soar

BERLIN: Germany on Wednesday signed off on an energy price cap, the cornerstone of a massive 200-billion-euro ($198-billion) package to shield households and businesses from rising costs.

"The source for these consequences and great challenges is (Russian President Vladimir) Putin's war," German Chancellor Olaf Scholz said at a press conference, reports AFP.

The support package was Germany's response "so that citizens do not have to fear their bills", said Scholz, who has ploughed ahead with plans despite criticism from European partners.

Germany's businesses have also been crying out for help at a time when Europe's largest economy is drifting towards recession and inflation has shot past 10 percent.

The plan will see the price for a percentage of household and businesses' typical consumption capped at lower-than-market prices. For gas, 25,000 larger businesses, as well as almost 2,000 hospitals and schools will benefit from the cap as soon as January 1 next year, according to the plan agreed between the federal government and regional leaders.

Households and smaller businesses meanwhile could have to wait until March 1 at the latest for the price brake to come into force.

Policymakers will "seek" to apply the relief retroactively from February 2023, according to the document.

A similar price cap will also apply to electricity from the start of the new year in January, with the measures set to last through to the end of April 2024.

While the cap for smaller consumers will only come into force later, the government will pick up their heating bills in December.