Germany slashes energy surcharge to help consumers weather soaring prices

The moon rises as electricians work atop a power pole near the lignite power plant of Neurath of German energy supplier and utility RWE, near Rommerskirchen north-west of Cologne, Germany, February 5, 2020. REUTERS/Wolfgang Rattay//File Photo

FRANKFURT, Oct 15 (Reuters) - Germany will cut a power surcharge levied on consumers to support renewable energy by 42.7% to help households cope with soaring energy prices, network operators said on Friday.

Germany and other governments in Europe are seeking to provide relief for consumers as gas prices skyrocket. read more

The reduction in the German levy, to 3.723 euro cents per kilowatt hour (kWh), confirms a Reuters report on Thursday. It will not take effect until Jan. 1. read more

The government will help fund the cut with 3.25 billion euros ($3.77 billion) in revenue collected from carbon taxes.

The fee, which was reduced by 3.9% last year to help the economy out of the coronavirus slump, is collected under the renewable energy act (EEG) and paid to producers of wind and solar electricity installations.

The EEG fee makes up one-fifth of a consumer's energy bill.

Transmission system operators (TSOs) calculate the fee by continuously monitoring income from the EEG levy payments and the size of the account in which they are deposited, and by factoring in wholesale prices and anticipated feed-in of renewable power onto the grids.

They said that in 2022 renewable power production is expected to rise by 11 terawatt hours (TWh) to 239 TWh, worth 22.8 billion euros at expected market prices.

The TSOs are Amprion (RWEG.DE), 50Hertz (ELI.BR)(KFW.UL), TransnetBW (EBKG.DE) and Tennet (IPO-TTH.AS).

Price comparison portal Verivox said a typical household consuming 4,000 kWh per year would save 132 euros on its annual bill.

But this is only arithmetic, because the savings may not be passed on fully by suppliers.

"Because of high wholesale market prices and rising network tariffs, there will not be significant relief for households," it said.

Kerstin Andreae, of the German utility industry association BDEW, said the incoming German government should quickly abolish the EEG fee. "That would relieve power customers and not least medium-sized industries permanently," she said in a statement.

($1 = 0.8619 euros)

Reporting by Vera Eckert and Tom Kaeckenhoff, editing by Riham Alkousaa, Miranda Murray and Susan Fenton

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