German consumers are threatened with financial overload: in addition to extreme gas costs, they also have to contend with rising electricity prices. As with gas, the state could also reduce taxes on electricity. Sample calculations show that households would immediately save an average of 230 euros per year.

To do this, the traffic light federal government would have to reduce the tax rates on electricity. She is already doing that with the price of gas.

The average electricity price for households at the end of August 2022 was 45.81 cents per kilowatt hour (kWh). It is higher than ever before.

A three-person household with an annual consumption of 4000 kWh has annual costs of 1832 euros. Within the last twelve months, these costs have increased by around 51 percent. This was determined by the comparison portal Verivox.

“Wholesale electricity prices are currently breaking a number of records. Households in Germany must therefore be prepared for further cost increases,” says Thorsten Storck, energy expert at Verivox. He points to a price-driving factor: Because the higher prices are taxed in full, the state benefits from the price increases. Storck’s advice to the federal government: “By reducing VAT and electricity tax, the federal government could provide noticeable relief.”

In contrast to natural gas, on which only seven percent VAT will be due from October 2022, a VAT rate of 19 percent will still apply to electricity. VAT on electricity currently costs a family of three around 293 euros per year. If the state were to tax electricity at the reduced VAT rate of seven percent in future, this would correspond to an annual reduction of 184 euros.

The electricity tax for private consumers is currently 2.05 cents per kilowatt hour. A three-person household costs 82 euros net per year. At the national level, the electricity tax cannot be completely abolished due to EU regulations. The European Union provides for a minimum rate of 1 cent/kWh for the electricity tax. A corresponding reduction would relieve households by 42 euros net.

If the electricity tax were reduced to the possible minimum and the value added tax from 19 to seven percent, the average annual costs for a three-person household would drop from 1832 euros to 1602 euros. That would correspond to a cost reduction of 13 percent, households would pay 230 euros less.

“By abolishing the EEG surcharge in July 2022, the federal government has already dampened the rise in electricity prices for households and significantly reduced the high state share of the electricity price,” says Thorsten Storck. “In view of the high procurement prices, however, further measures will be necessary to keep electricity prices at a tolerable level.”

For the calculation: Verivox determined the electricity costs using its consumer price index for a three-person household with an average consumption of 4000 kilowatt hours. The consumer price index takes into account the prices of the local basic suppliers as well as the new customer prices of the most important national suppliers.

If consumers are careful with their electricity consumption, they can cut their monthly bill. The most important tips for this:

Do you have obsolete electrical appliances, such as an old fridge or freezer? They have a significantly higher power consumption than modern, efficient devices or, for example, LED lights. Gradually switch to more energy-efficient devices!

Even in stand-by mode, your end devices still consume a lot of energy unnecessarily. That adds up over time. For this reason, always turn off your devices completely when you don’t need them. This is especially true for computers and TVs. But of course also for coffee machines and all other devices that have a stand-by function.

This is a simple and very efficient trick. In this way, the water in the pot boils faster and you save a lot of energy. Also, make sure you only heat the necessary amount of water in the pot!