Germany to cap energy prices in 2023

© Michael Sohn/AP

Germany plans to cap energy prices from the beginning of 2023 and could agree to a one-time payment to households and small and mid-sized businesses in December to cover heating costs.

The price caps are the cornerstone of a 200 billion euro package that would ease inflation pressure on households and businesses as energy costs are soaring, in part due to Russia's invasion of Ukraine, which has disrupted gas supplies to Europe.

The government is expected to implement proposals from the country's expert gas commission to cap a percentage of consumers' typical gas usage – from 1 January for industry and by 1 March at the latest for households

The cost of electricity would be similarly capped as of 1 January.

According to the commission’s draft proposal, all consumers will pay a capped gas price of 12 cents per kilowatt hour for 80 percent of their current consumption.

Any consumption above that will cost the normal contract price, a decision designed to maintain "incentives to save energy", even if prices for consumers were being reduced, according to the government paper.

The price caps are set to apply through to the end of April 2024.

Chancellor Olaf Scholz, who has resisted calls for capping energy prices, will meet with state premiers Wednesday to finalise the details of the agreement, which would include a one-off payment to cover winter heating bills.

(with wires)

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