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ENERGY

German public utilities need billions to fund energy gap

Germany's municipal utility companies need tens of billions of euros to cope with an explosion in energy prices, the sector's association VKU said Thursday.

Gas storage facilities in Saxony-Anhalt.
Gas storage facilities in Saxony-Anhalt. Photo: picture alliance/dpa | Klaus-Dietmar Gabbert

“We need liquidity for municipal services, which need to buy gas at up to prices that are 10 times higher than previously,” a VKU spokesman told AFP.

“We’re talking about a sum in the mid tens-of-billions range,” he said, adding that talks were ongoing with the government to plug the gap.

Russia’s war in Ukraine has triggered an earthquake on European energy markets, cranked up the pressure on suppliers and raised fears of possible shortages over the winter.

Germany, as Europe’s top economy has found itself particularly exposed due to its previous heavy reliance on Russian energy imports.

Soaring power costs have hit the country hard as it seeks to pivot to other sources.

Municipal utilities companies cannot pass on the rising costs to clients, who “are simply unable to pay” the difference, said the spokesman, stressing that it was necessary for the federal government to step in.

Chancellor Olaf Scholz’s government this week nationalised energy giant Uniper to stop it from going under.

Earlier in September, the German government entered into discussions with another gas supplier, VNG, over a possible bailout package.

READ ALSO: Germany reaches deal to nationalise troubled gas giant Uniper

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MONEY

German cabinet approves €300 energy relief payment for pensioners

The German cabinet has approved a one-time payment in December for pensioners to provide relief for rising energy bills.

German cabinet approves €300 energy relief payment for pensioners

The €300 payment is to be paid out by December 15th, Labour Minister Hubertus Heil, of the Social Democrats, said on Wednesday following the cabinet meeting. 

The cabinet also decided on a higher upper limit for people with so-called midi-jobs, which is a type of marginal employment in between a mini-job (which is generally exempt from taxes and social contributions) and full-time employment. 

Politicians in the coalition government, made up of the SPD, Greens and FDP, agreed on the measures in September as part of their third energy relief package.

Heil said the state was “standing by people” at a time when the cost of living was rising. 

Why are pensioners receiving a special payment?

Germany has put together several major relief packages to help people financially since the start of the energy crisis. 

One of the most high profile support measures, which was announced back in March this year, was a €300 taxable payment given out to people in employment. That was paid out in employees’ September pay packets. 

READ ALSO: Everything Germany is doing to help relieve rising energy costs

However, the government was slammed at the time as millions of pensioners were left out from the relief. It was only valid for taxpayers in tax brackets I to V.

According to the Federal Ministry of Social Affairs, a lump-sum energy payment will now be paid to all those who are entitled to a statutory old-age pension, pension for reduced earning capacity or surviving dependents’ pension, or to pension payments under the Civil Service or Soldiers’ Pensions Act from December 1st until December 15th. 

Pensioners have to live in Germany to be entitled to the payment. According to the ministry, the payment is made automatically – people do not have to apply for it.

The energy allowance is not counted towards income-related social benefits and is not subject to social security contributions, the ministry emphasised. The government estimates the costs of the payout at about €6 billion.

Relief for people with low incomes

The increase in the upper earnings limit for people with midi-jobs is being increased from €1,600 to €2,000, the cabinet decided. This is also part of the third relief package put together by the coalition government to support people in the energy crisis. 

“The sharp rise in prices for energy and food is a heavy burden on citizens,” said Heil, adding that the measures in the package will cushion some of these costs. 

The increase in the midi-job threshold alone would relieve the burden on employees subject to social security contributions with low wages by €1.3 billion, without having to forego social protection, he said.

“In this way, we are providing targeted relief for people with low incomes,” said Heil.

Unlike mini-jobs, midi-jobs are not exempt from social security contributions. However, they are subject to staggered reduced rates. Employees in midi-jobs do not have to pay full social security contributions until they reach the upper limit of €1,600 at present – and €2,000 in future.

READ ALSO: The rules in Germany around ‘mini’ and ‘midi-jobs’

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