Just about a month ago, the brake on the electricity price was extended until the end of 2024. But now the federal government is following the demands of economic experts and decided on Wednesday in the Council of Ministers to halve the subsidy.
In principle, the first 2,900 kWh (kilowatt hours) of electricity per year for each household will continue to be subsidized until the end of the year, but from July 1, the subsidy will drop from a maximum of 30 to a maximum of 15 cents per kWh. The upper limit of the energy price up to which the brake works drops from 40 to 25 cents.
Electricity prices have fallen sharply since the introduction of the brake
Ultimately, households will only have to pay 10 cents per kWh for the first 2,900 kWh of electricity per year. With the new scheme this means: if you have to pay 25 cents per kWh, you get 15 cents, but if you pay 30 cents it is also 15 cents. Households with more than three people also receive a subsidy of 52.50 euros per person per year; for low-income households, 75 percent of network costs are waived. The electricity price has fallen sharply since the introduction of the brake in the autumn of 2022, but not yet at pre-crisis levels.
With this change, the government wants to stimulate competition in the electricity market, especially when it comes to end-user rates. Wifo boss Gabriel Felbermayr has been calling for the subsidy to be halved for some time. “On the one hand, this should make the brake on the electricity price cheaper for the Ministry of Finance, and on the other hand, it should ensure that there are more incentives for households to switch electricity suppliers if the 15 cents is not enough to bring the electricity price to a bearable level,” Felbermayr said last week compared to Ö1.
The skimming of windfalls from energy companies will also be adjusted and extended until the end of 2024. To promote the expansion of green energy production, 75 percent of the investment costs can now be deducted instead of the current 50 percent.
Source: Krone
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