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How not to get shocked by your next German electricity bill

Ever opened your electricity bill in Germany and wondered why and how you're paying so much? Are you confused by German electricity contracts and their masses of inscrutable text?

How not to get shocked by your next German electricity bill

Dealing with the in and outs of getting connected and paying electricity bills is something many of those moving to Germany end up struggling with. 

To help our readers get a better sense of how electricity contracts in Germany work, The Local spoke with CEO and co-founder of digital renewable provider Ostrom, Matthias Martensen, to answer some of the most common questions asked by The Local Germanys readers.

Can you please explain ‘Nachzahlung’?

“Unfortunately, Germany is still not very digital, so upon registering with an energy provider you need to submit an estimation of your consumption for one year. After one year you will be asked to submit your actual meter reading, so your provider can calculate your final bill.

If you have used more energy than estimated, you will have to pay the extra amount – this is known as Nachzahlung or ‘after payment’. However, if you used less energy than estimated you will receive a refund into your bank account. You should of course receive a statement from your provider, indicating whether you will need to pay, or be refunded.” 

Does a landlord have any right to refuse if you want to change your electricity provider?

“This depends on your rental agreement. If you pay for your energy yourself, you have the freedom to choose your own supplier.

In the vast majority of cases in Germany, outside of a shared apartment, your electricity provider is your choice, and it is important that you compare the offers of providers, so that you pay only what you need.”

What are the major factors that influence my electricity prices?

“Energy prices are driven by two main factors—one is the raw commodity prices for coal, oil and gas, and the other is the weather. When there’s lots of wind and sun, Germany can produce a substantial amount of renewable energy, which is cheaper.

Of course, global events also have an effect on the prices offered by electricity providers, as we have seen over the last couple months.”

Looking for a new electricity provider? Ostrom is a sustainable energy provider with all services provided in English. Find out more

How often can we expect to see changes in our electricity bill prices? How will current events influence how much I pay for electricity?

“At Ostrom we try to minimize price swings as much as possible. As you can imagine, this has been difficult to do in the last few months due to the energy crisis and now Russia’s invasion of Ukraine. Unfortunately, Germany is still quite dependent on conventional power plants, a lot of which use gas and coal that is imported from Russia.

Over the next couple of months, a lot will depend on whether European governments will introduce oil and gas embargoes, as we have seen discussed in the media, or whether Russia will stop exports altogether. Both would mean higher electricity prices across all of Europe.”

What are some ways that I can reduce my electricity bill? 

“There are several ways you can save on energy. The most effective is to create good habits like switching off lights when you aren’t in the room, hanging your clothes to dry instead of using the dryer or turning appliances off instead of leaving them in standby mode.

You can also ensure that your household appliances have a high energy efficiency rating, as shown by the EU energy label. You can also ask to see the Energieausweis, or ‘energy certificate’ for an apartment or building you are looking to rent, to see how energy-efficient the property is at retaining heat, for example. 

Perhaps one of the most effective things people can do to save is provide regular meter readings via the app to the supplier. This means that your tariff can be more accurately calculated. 

Ostrom put together a comprehensive list of tips on how to save energy here: Ostrom‘s Energy Saving Tips.”

Find out more about the German energy provider built for internationals, whose service you can manage from your smartphone

A fixed-price guarantee could end up costing you more than you think.

I see many electricity providers offering a ‘fixed price guarantee” – will I save money with one? 

“Fixed prices automatically mean a tiered-system and you need luck when you sign up. In the current situation for instance this means you are locked into high prices. At Ostrom all customers are on the same price and if prices decrease, we will pass those savings to our customers. The majority of providers don’t like to take risks, and will pass the cost burden onto customers, even if circumstances change and energy becomes cheaper over time.

This is why we don’t offer fixed price guarantees at Ostrom. When prices decrease, so does our tariff. Lowering prices is something we’ve already done this year. With our flexible monthly plan, every customer pays the same price for electricity, and you can adjust your monthly payment at any time.”

In recent months the legislation surrounding contract lock-ins has somewhat changed, but the fact remains that traditional energy suppliers still require you to sign a minimum 12-month contract with them at a fixed price.

Ostrom co-founder, Matthias Martensen, and the Massbach Solarpark in Bavaria.

Not only is Ostrom a German electricity provider that passes savings onto the consumer, it is specifically designed for international workers and students in Germany. A simple tariff applies to all customers, and the more often you submit a meter reading, the more likely you are to save money. 

Furthermore, all Ostrom documentation and contracts are in English and everything can be controlled from the smartphone app, including the submission of meter readings. 

Finally, if sustainability matters to you, Ostrom sources their power from renewable sources, including the Maßbach Solarpark in Bavaria. 

Ostrom is a good choice for those making the move to Germany. As Matthias Martensen told The Local: “We know that electricity contracts in Germany can prove bewildering. Since we’re a young international company ourselves, we have a natural understanding of the needs of a modern, flexible and international clientele. It’s in our DNA.”

Looking for a sustainable energy provider designed for international residents? Find out more about how Ostrom does energy differently, and how you can benefit

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READER QUESTIONS

Reader question: Will retirees benefit from Germany’s energy relief package?

Students, freelancers, benefits claimants and employees are all set to get a financial boost from the German government this year - but have they forgotten about pensioners?

Reader question: Will retirees benefit from Germany's energy relief package?

Record levels of inflation, spiralling energy prices and fears of shortages… the news has been getting worse and worse for consumers in recent months.

At the start the year, the government announced it would be stepping in with numerous measures to help people pay their bills during these difficult months. But as more details of the measures emerged, there appeared to be one major omission: financial support for pensioners.

To find out whether pensioners will benefit from the relief packages, it’s worth taking a look at each of the measures in turn. In most cases, pensions have sadly been left out of the equation, but there are a few things that may help cushion their rising living costs.

READ ALSO:

€9 ticket and fuel tax cut 

We’ll start with the good news: the €9 monthly travel ticket and cut in energy tax on fuel are both designed to benefit everyone, including pensioners.

Unfortunately, the fuel tax cut doesn’t appear to have dampened prices at the pump very much. However, pensioners can enjoy cheap public transport throughout June, July and August with the €9 ticket. 

Überlingen Am Bodensee

Passengers exit a regional train in Baden-Württemberg at Überlingen am Bodensee. Photo: picture alliance/dpa | Felix Kästle

This is obviously great news for retirees who live in cities and parts of the country with good transport networks – but less good news for those who use their car to get around. 

The government’s third mobility measure – an increase in the commuter allowance to 38 cents per kilometre – is also unlikely to benefit the vast majority of pensioners. This measure allows workers who commute long distances to offset some of these costs in their tax returns. 

READ ALSO: Nine of the best day trips from Munich with the €9 ticket

€300 allowance for taxpayers

This flagship energy relief measure – a one-off payment for taxpayers – is another bit of support that pensioners may miss out on. 

The one exception would be pensioners who still work a part-time job to prop up their income.

Even if you’re only working a couple of hours a week, you’ll be entitled to a €300 bonus come September. It’s worth mentioning that this is taxable – but if you don’t earn enough to pay tax, the entirety of the €300 is yours to keep.

However, there may be a way that pensioners can get hold of the money even if they don’t have a regular job. As CDU finance expert Antje Tillmann explains: “It is enough, for example, that a pensioner looks after his grandson for one hour once in 2022 and receives €12 minimum wage from his children in return as part of a mini-job or from self-employment.

“Subsequently, he declares this income in the tax return and gets the energy price lump sum paid out in May 2023.”

READ ALSO: Who gets Germany’s €300 allowance – and when?

One-time heating allowance

As part of its first energy relief package, the government announced that recipients of housing benefit would be eligible for a one-time payment to help with their heating costs.

This is set at €270 for a one-person household and €350 for a two-person household, plus €70 for each additional family member. 

Pensioners who received housing benefit at any time between October 2021 and March 2022 should be eligible for this allowance, as well as people who currently receiving it. 

Pensioner counting money

A German pensioner counts cash in the kitchen. Pensioners who receive social support from the state could be eligible for one-off payouts. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

One-time allowance for benefits recipients

Pensioners who receive Grundsicherung (basic allowance) should be eligible for a one-time lump sum of €200, which will also be paid out to Hartz IV recipients.

Other allowances, such as the €100 Kinderbonus and €100 for people receiving Arbeitslosengeld I, are sadly unlikely to apply to pensioners. 

Scrapping of the EEG levy

The Renewable Energy Act (EEG) levy, which adds about 3.7 cents per kilowatt hour onto consumers’ energy bills, is set to be scrapped on July 1st.

This should benefit anyone with an electricity contract, including pensioners.

Tax relief measures

The government is raising the tax-free allowance for 2022 to €10,347 and raising the value of automatically deductible expenses to €1,200 per year.

Neither of these measures will benefit pensioners who don’t pay tax. 

READ ALSO: KEY POINTS: What Germany’s budget means for you

To sum up: Which measures can pensioners benefit from?

  • €9 ticket (for public transport users)
  • Fuel tax cut (for drivers)
  • Scrapping of EEG levy 

Pensioners claiming welfare could also benefit from:

  • €270 allowance for housing benefit recipients, and
  • €200 allowance for Grundsicherung recipients

Pensioners do seem to be getting a slightly raw deal in comparison to those in employment. However, there are some general measures they may benefit from, and those who are already getting help from the state should also receive a small income boost. 

READ ALSO: EXPLAINED: Germany’s plans to ditch sanctions for the unemployed

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