GUY CHAZAN / Financial_Times
The German government should pay all private households’ gas
bills in December and subsidise residential and industrial gas prices for more
than a year from early 2023, a commission ofexperts has proposed.
The
21-member commission of leading economists, business and trade union
representatives said the measures would costabout€91bn. The idea of a gas price
brake was floated late last month by Chancellor Olaf Scholz as part of a €200bn
“protective shield”, financed by borrowing. It was thelargest aid package adopted
by a European government since Russia’s invasionofUkrainelifted energy costs.
But some EUmember states have said the move undermines efforts to forge a
commonapproachonlowering prices. Members of the commission rejected suggestions
that theGerman plan risked undermining European unity. “Wewant a solution of
solidarity for Europe, which Germany will be part of,” said
MichaelVassiliadis,leader of the IG BCE union and amember of the panel. “Ifwe
don’t give anything to German tenants, tenants in Greece will also get
nothing,” he added. “If we help German tenants, that doesn’t mean we don’t want
to help peoplein [the restof]Europe.” Veronika Grimm, an economics professor at
the University of Erlangen-Nuremberg, another member of the commission, said
the plans reflected the “new normal”of higher energy costs. The commission is
proposing a twostage relief package beginning with the €5bn move to cover all
private households’ gas bills forDecember. In the second stage, private
households and small and medium-sized enterpriseswould paya subsidised price of
12 cents per kilowatt hour for 80 per cent of their gas consumption, for 14
months from March next year, with all gas use above that level charged at
market prices. The commission also proposed that industrial companies should
pay just 7 cents/kWh for 70 per cent of their gas consumption from January
nextyear, for 16months. Grimm said gas prices had soared since Russia’s
invasion of Ukraine in February, with contracts being “increased across the
board, sometimes to 20, 25, 30 cents/kWh from 7 cents originally”. Vassiliadis
said the proposals would both provide “effective protection” to consumers while
preserving “incentives to save [gas]”. The €91bn figure includes €66bn to cover
the cost of subsidising private gas bills for private households and small
businesses and €25bn for subsidies to industry. The 12 cent/kWh price figure
“is the price level that we would expect in the future”, Grimm said. This “will
be much higher than the pricelevelwe had before February 24” — the day of
Russia’s invasion of Ukraine, said Siegfried Russwurm, head of the BDI business
lobbyand commissionmember