Germany seeks to cap electricity and natural gas prices to help households and businesses recover from soaring energy prices, The Wall Street Journal reported on Monday, citing German government officials.
The Journal’s sources say the plan to cap prices in Europe’s biggest economy could become official in the coming weeks if the EU fails to agree a price cap for the entire bloc.
Elsewhere in Europe, in the UK for example, there is a price cap on energy bills that energy suppliers can charge customers. The new United Kingdom has just announced that it would cap annual household energy bills at $2,700 (£2,500) for two years.
Unlike the UK price cap and a similar measure introduced in France, the cap in Germany would instead impose a tax on power-generating companies that charge more than a certain amount, yet to be determined, according to the Journal’s sources. The money from the producer tax would then be distributed to operators supplying energy to end users, which would reduce electricity prices for end users.
Many energy-intensive industries and companies in Germany are already feel the pinch of soaring natural gas and electricity prices. Some have reduced production or shut down entire production lines, many others are considering doing so.
Signs are mounting that Germany’s economy is slipping into recession, which will deepen as we head into the winter months amid the ongoing natural gas and energy crisis, Bundesbank, the bank Central Germany, said in its monthly report last week.
Also last week, the German government, energy giant Uniper and Uniper’s majority shareholder, Finnish company Fortum, have signed an agreement under which Germany nationalize its largest gas importerin order to prevent a collapse of German energy and gas suppliers.
By Michael Kern for Oilprice.com
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