From Corona to the energy crisis

One of the first energy price offerings in Bavaria is a fitness center in Munich. Financially weakened by the closure, the owner could no longer afford the sharply increased costs of heating gyms, swimming pools and saunas. The prices of gas, heating oil and electricity have in some cases more than doubled within a year. The reasons include the economic recovery after the Corona crisis, the expensive CO2 emission certificates and the Ukraine conflict. The contractor had to file for bankruptcy. The Bavarian Chamber of Industry and Commerce speaks of an “additional endurance test for companies” – especially for the tourism, event, trade fair and service sector, which has been hit by Corona.

Industry in Germany is also hard hit as it requires much more energy. According to a study by the Federation of German Industries, the existence of 23 percent of medium-sized companies is threatened. Things look a little better in Bavaria because the liquidity situation is still relatively good despite Corona. But even in Bavaria, 84 percent see energy prices as a risk. According to the traditional Upper Franconian company Heinz-Glas, they can only afford the high prices for another six months. An electricity provider for large customers in the Free State reports behind closed doors about companies that can no longer pay their bills.

Private households are just as affected by the exploding prices. According to a survey conducted by the Federation of German Consumer Organizations (VZBV), 62 percent fear that the energy price crisis will put economic pressure on them in the future. “Particularly low-paid people hardly know how to pay the bills due to the huge price increases,” complains VdK chairman Verena Bentele. Together with other tenants, environmental, social and consumer associations, she demands, as in the Corona crisis, that those affected do not immediately turn off electricity and gas despite unpaid bills. As a result, tens of thousands of households in Bavaria have to do without light, hot water, stoves or refrigerators every year. Nationwide, there are more than 350,000 interruptions a year.

The federal government wants to support people with little money with several 100 million euros in the summer. Hartz IV recipients must receive a one-time payment of 100 euros, trainees and students 115 euros. For persons receiving housing benefit, the amount increases to 135 euros, for a two-person household there is 175 euros, for each additional person 35 euros. Children affected by poverty will receive an immediate bonus of 20 euros per month from 1 July. “Too little,” says CSU chief Markus Söder. It’s not even half of what a family with two children has to pay. So far, retirees have stood completely empty-handed. VZBV considers 500 euros per. years and household to be reasonable.

In light of the record high fuel prices, both the EU and the left in the Bundestag are in favor of a tax reduction on petrol and diesel in order to reduce energy costs. ADAC is also fighting for an increase in the commuter allowance: Instead of 35 øre, there must be 38 øre – from the first kilometer. So far, the traffic light government has refused to spend billions more on promoting fossil fuels. In both cases, high-income households will receive a disproportionate benefit. Meanwhile, a retroactive increase from January 1, 2022, at least for distances of 21 kilometers or more, is no longer ruled out. In addition, the employee supplement to income tax is retroactively increased by EUR 200 to EUR 1,200 and the basic supplement from EUR 9,984 to EUR 10,347.

Other countries have long since decided to make things easier

Politicians reacted much faster abroad. Spain reduced VAT on electricity from 21 to 10 percent in June 2021 and completely suspended the 7 percent tax on electricity generation. Low-income households receive a heating bonus and electricity price discount. The latter get people in Norway and Sweden as well. France has regulated or capped electricity and gas prices and transferred 100 euros to people with an income of less than 2000 euros. In the UK, the government gives most households a one-off £ 150 rebate on local taxes. In Poland, VAT on fuel has been reduced from 23 to 8 percent. For gas and groceries, it was even completely canceled. Hungary has set a maximum price for petrol and diesel. Greece subsidizes its citizens with an average of 39 euros a month.

It is possible that the federal government has not yet acted because the high energy price is meeting it. From taxes on electricity and energy alone, it is expected to earn around 1.4 billion euros more this year than in 2021 due to price increases. In addition, the high price of electricity reduces public consumption: The Renewable Energy Sources Act (EEG) obliges grid operators to use electricity from wind power or photovoltaic systems for a fixed fee. The difference is offset by the state and electricity customers. The more expensive electricity that can be sold on the market, the less the state has to pay for the so-called EEC supplement.

Under pressure from consumer protection groups, trade unions, the business community and the opposition, the traffic light coalition has now announced that it will remove this tax faster than planned. The problem: As the EEG surcharge is currently very low due to the high electricity prices, the abolition for the citizens is only a small relief – if at all. Electricity companies like to pass on rising costs, but they are not so keen on passing on relief.

The energy supplier RWE has already increased the dividend to its shareholders: the company expects a significant profit this year due to the high electricity prices.

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