Call to prevent power cuts in poorest German households

More than 340,000 electricity customers across Germany have their power cut off each year for failing to pay bills. A new proposal from one political party aims to change this.

Call to prevent power cuts in poorest German households
Energy poverty is an increasing problem in Germany. Image: DPA

Figures from 2017 show that there were 343,865 cases of people having their electricity shut down off due to not paying a bill, an increase of 14,000 from the previous year.

The average amount owed in these instances was €117, highlighting how close many German individuals and families are to the breadline. 

A total of 6.6 million warning letters are sent on average each year, of which 1.2 million power blocking orders are sent. The figures indicate that just under one third of those blocking orders results in a power cut. 

Poverty has been on the rise in Germany in recent years. A 2017 study showed that approximately 13.4 million people in Germany live in poverty or are considered at risk of poverty, representing roughly 16 percent of the population. 

A proposal from the left-wing Greens party hopes to change this by putting in place an ‘electricity cost allowance’, an amount that would be paid in addition to the current Hartz IV (German social welfare) rate. 

‘Energy poverty’

While having a phone or internet connection cut off is likely to be inconvenient, losing access to basic utilities can be significantly problematic – particularly in the harsh German winter. 

The Süddeutsche Zeitung, citing a proposal drawn up by the Greens, reported that tens of thousands of Germans frequently go without power. The Greens want to avoid a situation where German families cannot heat their apartments or cook food. 

The proposal would also eliminate the costs associated with sending reminders and for blocking and unblocking an electricity account. 

Electricity bills are rising in cost. Image: DPA

Lower-income Germans the most affected

Sven Lehmann, a spokesperson for the party, told the Süddeutsche Zeitung that the changes were necessary to address electricity price hikes and cost of living increases.

“About half of the total power cuts are for people receiving social help,” he said. 

“Since the introduction of Hartz IV, electricity costs have risen more than the standard costs of electricity.”

The electricity cost allowance would be paid in addition to the current Hartz IV rate. Where a household starts to enter debt due to rising electricity costs, a scheme would be developed to allow them to repay the amount without incurring further debt.

The proposal also included funding for lower income households to upgrade from their current appliances to newer ones which use less energy. 

Many of these households already struggle to meet their existing financial obligations, meaning upgrading and improving appliances is impossible. 

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“Electricity shut offs can be prevented,” Lehmann said. 

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KEY POINTS: How will Spain tackle rising electricity prices?

On Tuesday, the Spanish government approved a raft of measures to help reduce the ever-increasing electricity bills that those in Spain have been facing in recent months. Here's how they plan to do it and what measures will be in place going forward.

KEY POINTS: How will Spain tackle rising electricity prices?
How the Spanish government plans on reducing electricity bills. Photo: Michael Schwarzenberger / Pixabay

Electricity prices have been rising to record levels recently, with one of the highest prices yet at €172.78 /MWh, expected on Wednesday, according to electricity market operator OMIE. 

Here’s how the government plan on lowering the price of electricity in Spain. 

Prohibiting companies from cutting off electricity for low-income families

The government has approved a new rule which states that vulnerable consumers (families with low incomes) will be able to benefit from 3.5kW of power – sufficient for an average household for six months – in the event that they are unable to pay. This means that the limit at which companies can now cut off the electricity supply of the most vulnerable has been extended from four to ten months.  

Tax cuts

Special tax on electric power has also been dropped from 5.1 percent to 0.5 percent, as promised by Prime Minister Pedro Sánchez during his interview on TVE on Monday. The suspension of the tax on electricity production has also been extended.  

Electricity auctions

One of the most innovative decisions among these new measures is that the government will call auctions in which the large electricity companies such as Endesa, Iberdrola, Edp, and Naturgy will be obliged to sell a percentage of the energy they generate.  

These auctions, which will have a minimum price to guarantee production costs, will be attended by small trading companies and large industries. These companies will then be able to purchase energy cheaper than in the current wholesale pool. Mainly nuclear and hydroelectric plants will participate in this plan.

The government announced that the first auction will be called before the end of the year. 

Putting a cap on gas prices

During the next two quarters, the price of gas consumed by households will not be updated in accordance with market prices.

Third deputy Prime Minister Teresa Ribera explained that a price hike of more than 28 percent for gas in the wholesale market is expected, while on average the regulated rate will rise below five percent.

In addition, until March 31st 2022, the government will tax the profits of the electricity companies, due to the rise in gas prices. They have established a cap of €20 euros per megawatt hour for gas, and when it rises above that price, the extra profits obtained by the companies will be charged a tax that will be used directly to reduce electricity bills.

Maximum and minimum reservoir levels

After the controversial drainage of reservoirs by the electricity companies coinciding with the maximum prices in the wholesale market, the government has decided to set maximum flow levels that can be discharged each month, and minimum levels that must be maintained in the reservoirs.

This prevents an excessive amount of water from being drained. It will be the hydrographic confederations that will set these amounts.