Germany to subsidise basic level of power for homes, businesses - ministry paper

Workers renovate an electricity pylon near Gilching south of Munich
Workers renovate an electricity pylon near Gilching south of Munich October 14, 2014. REUTERS/Michaela Rehle

BERLIN, Sept 8 (Reuters) - Germany plans to subsidise a basic level of electricity usage for households and set aside cheaper power for small and medium-sized businesses, according to measures set out in an Economy Ministry paper seen by Reuters on Thursday.

Electricity distributors would be required to grant households a certain electricity quota at a discounted price per kilowatt hour, with a similar contingent planned for small and medium-sized enterprises, the paper said.

The stated goal is to decouple the price of electricity from the price of gas, which has rocketed since the Ukraine war and subsequent plunge in Russian deliveries to Germany.

The ministry also detailed a planned cap on electricity prices for producers, with the difference on the market price to go towards funding the relief.

Electricity producers have benefited from high gas prices, which indirectly affect prices on the electricity exchange, despite little change in the cost of generation.

The mechanism suggested by the ministry differentiates between renewable energy, which would have a spot market revenue cap, and energy from conventional power plants, such as coal and nuclear, which would be required to pay a "crisis contribution."

Based on a paper agreed by the German cabinet and seen by Reuters, the mechanism could raise revenues amounting to double-digit billions of euros. read more

Germany will push the measures at the European Union level but is ready to implement them at the national level should agreement not come quickly enough in Brussels, the ministry said.

EU energy ministers are set to meet on Friday to discuss a proposed price cap on Russian gas as well as a ceiling on the revenue of non-gas power generators, among other measures. read more

German Economy Minister Robert Habeck welcomed the EU proposals on Thursday as being "very much in line with what we had suggested."

Since the Ukraine war began in February, European governments unveiled multibillion spending packages to shield households and businesses from soaring energy costs, with new British Prime Minister Liz Truss set to announce her 100 billion pound ($114.85 billion) plan later on Thursday. read more

The German government on Sunday agreed a relief package worth at least 65 billion euros ($64.99 billion), bringing this year's total to 95 billion euros. read more

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Reporting by Markus Wacket, Writing by Rachel More and Miranda Murray, Editing by Madeline Chambers and Tomasz Janowski

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