The high gas prices also have an impact on the price of electricity. This is increasingly burdening private households and companies, and associations fear that many companies will go out of business. The Federal Finance Minister, among others, has now joined the discussion.
Federal Minister of Finance Christian Lindner has called for speed with the reform of the electricity market. “The federal government must address the electricity prices with the utmost urgency,” said the FDP chairman of the “Bild am Sonntag”. Otherwise “inflation will be driven more and more by an electricity crisis”.
Lindner criticized the sharp increase in profits for operators of wind turbines, solar systems and coal-fired power plants: “Politicians have set up a profit autopilot on the electricity market.” Based on the applicable rules, producers of solar, wind or coal power would automatically be paid as if they had bought expensive gas. “Profits are increasing billion by billion at the expense of consumers.”
Federal Economics Minister Robert Habeck (Greens) wants to curb prices for consumers and industry with a fundamental reform of the electricity market. The aim is to decouple the development of end customer prices for electricity from the rising gas price.
Christian Lindner speaks of the “profit autopilot”
In view of the sharp rise in energy prices, medium-sized companies are demanding a protective shield for companies. Similar to the corona pandemic, a hardship fund is necessary for companies that have been hit particularly hard by the energy price and are no longer competitive internationally, said Markus Jerger, federal director of the Federal Association of Small and Medium-Sized Businesses, of the German Press Agency (DPA) in Berlin. “Even the strongest economy cannot withstand the doubling or tripling of energy prices.”
The deputy DIHK general manager Achim Dercks pointed out in the editorial network Germany that a “frighteningly high number of companies, especially in industry” were forced to react to the high energy prices by reducing production or even shutting down. Many companies could disappear. In many cases, orders are permanently taken over by international competitors at locations with lower energy costs. “So that more industrial companies do not have to give up production, the emergency payments, which have been extremely narrow so far, should be extended and expanded as a matter of urgency.”
SME representative Jerger said many companies could not pass on rising energy prices to customers. The electricity tax must fall to the minimum permissible in Europe. As with gas, VAT should also be reduced from 19 to 7 percent for electricity. In addition, an industrial electricity price tariff is necessary.
Private households are heavily burdened
From the point of view of the credit agency Creditreform, the rise in energy prices will also significantly worsen the economic situation for many private households. Creditreform economist Patrik-Ludwig Hantzsch told the “Handelsblatt”: “The additional burdens are already serious.” Rising inflation will significantly exacerbate the over-indebtedness situation. “In some cases, this will also lead to an increase in private bankruptcies,” said Hantzsch. “After two years of Corona, some companies are already pretty worn out.”
According to his ministry, Habeck wants to achieve with the intended electricity market reform that customers benefit more from the cheap renewable energies on their electricity bill. To this end, the resulting excess profit effects in the electricity market, which arise from the so-called merit order for power plants with very low production costs, are to be addressed. These excessive profits should therefore be passed on to the end customers.
However, according to the Ministry of Economic Affairs, the functionality of the European electricity market and the secure supply of electricity should remain guaranteed. Pricing based on marginal costs in the European wholesale market itself should not be changed. The “merit order” would remain, but the problematic effects would be changed. Such a reform is complex, and the European partners must also be involved. In the short term, the focus will therefore continue to be on an “excess profit tax” and on timely relief for consumers and aid programs for the economy.
Merit order regulates procedure on the electricity exchange
The merit order is the order in which the power plants that are offered on the electricity exchange are used. Power plants that produce electricity cheaply are used first to meet demand. Such as wind turbines. In the end, however, the price is based on the power plant that was switched on last and is therefore the most expensive, in order to cover the demand – these are currently gas-fired power plants due to the high gas prices. As a result, electricity prices have also risen significantly.
The chairwoman of the SME and Economic Union, Gitta Connemann, criticized Habeck for boldly announcing a reform and promising relief. “But in the end his proposal means nothing more than a hidden excess profit tax.” Instead of discussing the abolition of market principles, a strategy for energy security is needed. This included the continued operation of the nuclear power plants, the lifting of the production cap for biogas and the consistent expansion of renewable energies.
Source: Stern
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