EU energy chief urges "speed limit" on German green power costs

Tue Sep 25, 2012 9:22am EDT

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* EU's Oettinger warns of runaway green power cost

* Subsidising costs for consumers could double in coming years

* Oettinger, RWE chief propose better harmonisation in Europe

COLOGNE, Germany, Sept 25 (Reuters) - Germany must rein in the runaway costs of subsidising electricity from renewable sources or risk overburdening consumers, European Energy Commissioner Guenther Oettinger said on Tuesday.

"We need a speed limit," Oettinger said, referring to the accelerating cost of funding electricity produced from sources such as wind and sun at above-market prices - a course Germany has chosen to become a low-carbon economy.

The subsidies have encouraged a rapid rise, beyond expectations, in renewable installations in Europe's biggest economy, which already has the second highest power prices in the EU.

Power grid firms are due in mid-October to publish a forecast for the green power element in next year's prices, which in 2012 were 3.6 cents per kilowatt hour under the green energy law (EEG).

This is out of a total household price of 25 cents/kWh, and must be shared by all consumers, except for some waivers for a growing number of companies such as steelmakers and chemicals.

Oettinger, speaking at a German conference, cited current projections by experts for the green component to rise to above 5 cents for 2013, a 40 percent year-on-year increase.

He said that in following years the rate could rise to 6 or 7 cents and, if value added tax was included, even 9 cents.

The rise to above 5 cents will work out as an additional 70 euros on the 900 euros ($1,200) average household power bill paid in 2012, of which 150 euros already go towards green power.

This year, the total EEG bill is 16 billion euros and next year it could rise to at least 20 billion.

The chief executive of utility RWE, Peter Terium, also said the 2013 charge might rise to 5.3 or 5.4 cents.

"That is too much," he said, adding public opinion could turn against the renewable strategy, which Germany adopted to rid itself of nuclear power and excessive reliance on foreign fuel suppliers.

Oettinger and Terium said at the conference that subsidising renewables - which needed a boost as they were initially not able to compete in power markets - should be organised more at a European level to reflect harmonisation drives in the bloc.

Germany adopted its policy without consulting neighbours and is headed for a general election in 2013 in which energy costs are likely to feature prominently. ($1 = 0.7743 euros) (Reporting by Vera Eckert and Tom Kaeckenhoff; Editing by Anthony Barker)

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