On behalf of the government, experts have made suggestions as to how the gas price brake should work. The good news is that bills are down by a third. The bad: In order to prevent misuse, the procedure is so complicated that hardly anyone will understand his billing slip.

How does the gas price cap work? There are now first details on the instrument that is supposed to lower gas prices for everyone and on which the government recently agreed.

According to the recommendations of experts who had commissioned the traffic light coalition with a concept, the state should take over the gas bill for this December as a first step.

In a second step, from March 2023 to the end of April 2024, prices are to be reduced to twelve cents per kilowatt hour for 80 percent of an estimated basic quota.

The remaining 20 percent will be charged at market rates. Households and companies are thus noticeably relieved. However, the state incurs expenses in the tens of billions, which it has to service from tax money.

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The comparison portal Verivox has already calculated what the relief means: A family with a gas consumption of 20,000 kilowatt hours has to be prepared for a gas bill of 4108 euros per year.

If 80 percent of consumption is capped at twelve cents per kilowatt hour (kWh), the gas bill at current market prices will drop to 2742 euros – this corresponds to a reduction of 1366 euros per year.

Verivox had previously warned: “In view of exploding procurement costs, heating customers are facing a very expensive winter,” said Thorsten Storck, an energy expert on the comparison portal. Now there is a clear relief effect.

“Capping the gas price at twelve cents for 80 percent of annual consumption would reduce household gas costs by around a third at the current price level.” The 80 percent quota will be subsidized down to twelve cents per kilowatt hour, explained trade union representative Michael Vassiliadis from the expert commission .

In order to set savings incentives, however, current consumption is not simply measured and subsidized, but consumption is determined on the basis of a past month – it is still unclear which exactly.

This means that consumers do not have the opportunity to enjoy the subsidies indefinitely. However, according to the experts, this cap can only be implemented from March.

In order to achieve relief this year, the expert commission of economists and representatives of the trade unions and industry has planned a reimbursement of the complete gas heating costs for private consumers and tradespeople for December, explained commission member and economist Veronika Grimm.

The processing should run through the utility companies and the administrations of apartment buildings. The individual consumer does not have to do anything. The amount should be stated as a benefit in kind for income tax purposes and taxed above a certain level.

This is to prevent energy saving from suddenly becoming unattractive in December because the state pays: anyone who squanders energy will notice this at the latest when they have to pay their taxes.

Nevertheless, the incentive to save is at least partially gone, which can become a problem. The gas is only enough this winter if everyone hits the brakes and consumes 20 percent less than last year. However, due to the cool weather, consumption is currently increasing compared to the previous year.

The suppliers of all customers with a so-called standard load profile – i.e. practically all household and commercial customers – should submit the monthly bill to a government agency. In addition to gas bills, district heating bills should also be paid afterwards.

There should not be an exact billing according to consumption in December, but the total consumption will then be visible in the customer’s annual statement.

The approximately 25,000 industrial companies that use a special gas tariff are to be relieved from January 2023. Commission member and BDI President Siegfried Russwurm explained that a quota of around 70 percent of consumption should be subsidised.

Companies would have to pay seven cents per kilowatt hour of gas for this. However, this is only the so-called procurement price, costs for network use and possible peak loads are added on top.

Companies can use the subsidized amount of gas themselves – or sell it on the market for a profit. It is therefore still in the interest of the industry to save gas, says Russwurm.

Overall, the Commission expects the gas price brake to cost more than 90 billion euros. Households accounted for around 66 billion euros, industry would be relieved with 25 billion euros.

The actual costs are subject to the fluctuations that depend on the actual market price of gas. It is also unclear what will happen if the gas price brake expires but the price of gas is still high.

A few days ago, the traffic light coalition announced a “defense shield” of up to 200 billion euros to support consumers and companies because of rising energy prices. The expert commission has now presented a first “interim report” on the design.

The defense shield should go far beyond that. In addition to national relief options, the experts should also examine “options for cushioning the price development at European level, taking into account pricing on the world markets”.

Further meetings are planned for October 17th and 24th, and the final results of the work should be available by the end of the month.

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*The article “Relief is coming, but nobody will understand his billing anymore” is published by WirtschaftsKurier. Contact the person responsible here.