2023-12-12 17:05:26
The electricity price brake is to be extended beyond mid-2024 and run “at least” until the end of 2024. According to Statistics Austria, the instrument created in light of the energy crisis with high price jumps has an inflation-dampening effect and is effective for around 80 percent of the average household consumption. The market price only applies when consumption exceeds 2,900 kWh. Inflation in Austria has recently always been above the average for its eurozone partners.
Chancellor Karl Nehammer (ÖVP) and Vice Chancellor Werner Kogler (Greens) announced the plan to extend the measure during a background discussion on Tuesday. Reference was made to the massive burden caused by gas and electricity prices in everyday life and on companies.
In addition, the energy taxes – i.e. the natural gas tax and the electricity tax – will remain reduced by around 90 percent for one year longer, i.e. until the end of 2024. This would bring relief of around 750 million euros. This should take into account demands from the industry, which pointed to similar regulations in Germany and possible competitive disadvantages.
“Inflation, especially in the energy sector, continues to be a major burden for many people in Austria,” said Nehammer, justifying the extension of the electricity price brake. “We are providing relief for energy costs by extending the electricity price brake and reducing energy taxes until the end of 2024,” said Kogler.
The electricity price brake for this year has an estimated volume of 3.8 billion euros. Around half of Austrian households consume less than 2,500 kilowatt hours (kWh) of electricity per year and therefore benefit entirely from the model. According to a Council of Ministers decision at the beginning of September 2022, the project should run until mid-2024.
The turquoise-green government confirmed that households would not only be relieved, but would also be given an incentive to save electricity. However, the incentive to save money was questioned by critics. Economic researchers such as Wifo boss Gabriel Felbermayr had, at least in the meantime, considered the usefulness of halving the aid.
The electricity price cap was decided to support households when electricity prices had multiplied in the wake of Russia’s attack on Ukraine. Specifically, it stipulates that households receive a subsidy of up to 30 cents for the first 2,900 KWh of electricity per year. The aim is an electricity price of 10 cents per KWh, but if providers charge more than 40 cents, households have to pay the difference – just as they also have to pay the full price for electricity consumption over 2,900 KWh. The price of electricity has now fallen sharply once more, although not yet to pre-crisis levels.
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