Professor Rüdiger Bachmann has proposed a form of gas price cap that could bring hundreds of euros to households and save the country large amounts of gas. Will politics implement them? The economist remains cautious.

Economist Rüdiger Bachmann (47) and colleagues have developed a proposal for a different gas price cap that is intended to distribute the burden more fairly and provide more savings incentives. Because the idea relieves consumers at the same time, everyone wins, says the professor at the US University of Notre Dame. FOCUS online spoke to him about his suggestion and his hope for implementation.

FOCUS online: Professor Bachmann, the gas levy is off the table, the federal government is planning the gas price cap. Do you want to take further action?

Rüdiger Bachmann: The federal government’s change of direction is definitely a step in the right direction, but the situation remains inefficient and unfair. Inefficient because the incentives to save gas are not widely distributed. Unfair because we punish people who have new gas contracts with high prices. Others get cheap gas because they happen to have an old contract. You haven’t accomplished anything, but you’ll be massively rewarded.

More on the subject: Consequences of the energy crisis – the head of the network agency reveals how long the gas price cap will be necessary

You want to solve both problems by having politicians declare existing gas contracts null and void.

Bachmann: According to our proposal, politicians will terminate all old gas contracts. As a result, all gas customers will in future pay the new, higher market price and have an incentive to save. Anyone who loses a favorable contract receives compensation. The easiest way for us to calculate this would be to multiply the customers’ previous consumption by the additional costs.

Anyone who would have consumed 1000 kilowatt hours based on the old consumption by the end of the contract and pays 30 cents per kilowatt hour more with the new contract will receive 300 euros.

Bachmann: For example. If you can’t or don’t want to save gas, you can continue to heat normally and end up with zero. If you save gas, you have money left over to spend. The incentive to save increases, but people no longer pay a euro.

It is also important that we do not leave customers who already have new contracts out in the cold. We have proposed a minimum compensation for them. It works according to a similar pattern, but only pays out the money afterwards, not directly when you change the contract.

Where is the money for the many contract terminations supposed to come from?

Bachmann: First of all, the energy suppliers buy out the contracts with their own capital. There is no reason why the state should do this. If things get tight for some companies, the state bails them out as long as they meet certain criteria, such as not paying bonuses to managers. The state and thus the taxpayers only absorb what the companies cannot afford and thereby save money. With our proposal, everyone wins.

Also the energy suppliers who have to buy old contracts from their customers?

Bachmann: The utilities are already making losses in the current situation. They only get a low price from customers with old contracts, but buy gas at high prices. Paying out that price difference only changes the timing of the loss. The suppliers are therefore not worse off.

Also read: Up to 200 billion euros – “Flat rate, easier and faster” – what the gas price brake means for you

No country in the world has yet decided on a gas price cap like the one you are calling for. Why?

Bachmann: I can’t say that. All I know is that Spain has decided on a simple price cap for gas. Unsurprisingly, consumption has not decreased. That would happen here too.

How can you be so sure?

Bachmann: We know from behavioral economics that people often behave in a socially desirable manner when their behavior is observable. That’s why most of us wore corona masks. But there was also a part that refused. No one can tell if you’re walking around in a T-shirt at home. This eliminates social control and prices have to take effect. When people get the right signals, they act accordingly.

Do you think politicians will implement your proposal?

Bachmann: That is difficult to predict. The original sin was that the federal government did not take care of a gas price cap early enough. Economists were already calling for action in March because we said: Putin will not stop supplying gas in the summer. Then he takes the money with him. He hires them when the heating season starts and he can use it as a bargaining chip. Nevertheless, politicians have overslept the topic.

Now the situation must be calmed down quickly. So the federal government has put 200 billion euros in the shop window with its rescue package. I understand that, because something has to happen. As a result, many highly paid lobbyists now want a piece of the cake. Industry, energy companies and so on fight over who gets the most money. I can’t predict what’s going to happen next.

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