Athens, Vienna, Paris, Madrid, Stockholm, London, Rome Data released this week by Italy’s energy regulator is alarming: In a year, electricity prices have risen 131 percent for a typical family, and gas prices have risen 93 percent. At the same time, a liter of petrol costs 1.83 euros, the highest it has been in ten years. All in all, it is an additional burden for families of around 400 euros per year.
But companies are also suffering, especially in the service sector: the Confcommercio association estimates that Italian hotels, restaurants and retailers spend twice as much on energy as their French competitors and up to 20 percent more than their German competitors.
All the fresh figures should reinforce Italy’s plan to relieve consumers and companies again. As early as this Friday, the government could decide to deduct at least five billion euros directly from electricity and gas bills in the second quarter. Relief of 5.5 billion euros has already been initiated for the first quarter.
It is not only in Italy that energy and electricity prices are putting pressure on the upswing. Governments across Europe are reacting to spiraling prices, which have continued to escalate as a result of supply bottlenecks and geopolitical tensions.
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Which instruments do the other states use? And what are the countries paying for the measures?
Hungary pushes through maximum prices at gas stations, Poland cuts taxes
For Hungarian Prime Minister Viktor Orbán, the boom in energy prices has come at the worst possible time: parliamentary elections are due in early April and Orbán and the opposition are almost neck and neck in the polls. Fearing that the high prices will damage him politically, Orbán has set a maximum price for petrol and diesel.
He has turned the gas station owners against him: If they buy the fuel, they pay the wholesale price, but can no longer pass the costs on to the drivers. The industry is also furious because Slovakian drivers who live near the border can now refuel cheaply in the neighboring country.
Poland has chosen a different approach: the government has reduced taxes on electricity, heating oil and petrol. For gas and groceries it was even completely canceled. Prime Minister Mateusz Morawiecki calls this an “anti-inflationary impulse”. Overall, the population should be relieved by 5.5 billion euros in half a year.
France relies on energy checks and price caps
Presidential elections are due in France in April, and energy prices are a sensitive issue for incumbent Emmanuel Macron. As early as autumn, the French government released a one-time payment of 100 euros for poorer households.
The “energy checks” cost Paris 580 million euros. Gas tariffs have risen by around 20 percent since January 2019. This is particularly felt by the five million people who heat with gas.
An even bigger problem is electricity: 22 million French heat with electricity. The energy suppliers and the state nuclear power operator EDF should therefore cap their prices.
The government wants to limit the increase in electricity prices in the regulated tariffs to four percent this year. Economics Minister Bruno Le Maire estimates that this measure could cost EDF up to 8.4 billion euros.
According to Le Maire’s ministry, the various measures to curb electricity prices for the current year are already swallowing up 20 billion euros. In addition to the energy checks, there is inflation compensation for low earners and a general reduction in the electricity tax, which alone amounts to eight billion euros.
The oil company Total is also participating in the relief and announced a “gas check” for 100 euros for 200,000 customers. Within the next three months, Total will also give a discount of five euros at its petrol stations in rural areas if at least 50 liters are filled up. Anyone who fills up with 20 liters gets two euros deducted from the bill.
Greece is planning targeted subsidies
The Greek government has paid out €1.7 billion in subsidies since September to cushion energy costs for citizens and businesses. In February, Athens wants to loosen another 350 million euros – regardless of income.
For a private household, the average monthly subsidy is 39 euros. Commercial consumers receive a subsidy of 65 euros per megawatt hour.
Prime Minister Kyriakos Mitsotakis announced that he would also pay subsidies for March and April, but “in a targeted manner and not according to the watering can principle”. The amount and modalities should be decided from month to month.
However, Mitsotakis has little financial leeway: the pandemic has put a heavy strain on the state treasury. According to preliminary calculations, the primary deficit will reach seven percent of economic output in 2021.
Private electricity suppliers are coming under increasing pressure. Many of the companies do not have enough liquidity to pre-finance the rising wholesale prices. Seven suppliers are already in debt to the network operator DEDDIE with more than 120 million euros. The first bankruptcies are only a matter of time, say market observers.
Great Britain grants households an energy loan
In the UK there is a statutory energy price cap that is set every six months. From April, this cap will increase by £700 to around £2,000 a year. At the same time, to ease the burden, the government is giving most households a one-off rebate of £150 on local taxes.
In October, all households will then receive a government advance of £200 on their energy bills. This sum is to be repaid in five annual installments of £40.
Overall, the measures will cost the state £9.2 billion. Up to 5.6 billion of this could flow back in the coming years. In fact, the advance is a loan.
So far, no state aid has been planned for companies. The trade associations have long been demanding support, especially for energy-intensive sectors such as paper production and chemicals.
E10 premium petrol is more expensive than ever in Germany.
(Photo: dpa)
In a letter to Finance Minister Rishi Sunak, five leading employers’ organizations warned that many firms have “little protection” against rising energy prices and have no choice but to pass the costs on to consumers. This would add to inflationary pressures. So far, Sunak has not relented: He believes that businesses and households must learn to live with the higher energy prices.
Norway and Sweden give electricity price discounts
In fact, Norway and Sweden are among the countries with the lowest electricity prices in Europe. However, due to the ever-increasing networking of power lines, prices have recently risen dramatically in Northern Europe as well. In June 2021, a kilowatt hour in Norway still cost the equivalent of 0.13 cents per kilowatt hour, but shortly before Christmas the price was 0.55 cents.
In December, the government decided that the state would pay half of the pure kilowatt price. However, the measure is capped at a monthly consumption of 5000 kilowatt hours – and expires in March.
Consumers were also relieved in Sweden. Homeowners with a consumption of 2000 kilowatt hours can look forward to a savings of around 200 euros per month. The support is valid for December to February.
Spain cuts taxes and helps the needy
Spanish consumers are feeling the effects of rising energy prices directly. 40 percent have a regulated tariff that is directly linked to prices on the spot market.
The government therefore reacted early: In June 2021, it reduced the value added tax on electricity from 21 to ten percent. The seven percent tax on electricity generation was suspended entirely, and the electricity tax was reduced from 5.1 to 0.5 percent in September.
In addition, Spain helps particularly low-income households with an electricity price discount of between 25 and 70 percent. They also cannot have their electricity cut off for ten months if they don’t pay the bill.
Since December, needy consumers have also received a heating bonus of around 90 euros per month for their gas heating systems. This year Madrid is also reducing network charges.
Despite all these measures, the average electricity bill of a Spanish household last year was 949 euros, according to the consumer protection organization OCU – 41 percent more than in 2020.
More: How EU countries want to reduce their dependence on gas from Russia