Factbox-Germany’s measures to protect consumers from rising energy prices

BERLIN (Reuters) – Germany agreed a 200 billion euro ($194 billion) “defensive shield” on Thursday to protect companies and consumers against the impact of soaring energy prices, in what the government called a show of strength in an “energy war” against Russia.

Here are the details of the aid package:

Push to expand energy supplies

The government will promote renewable energy, develop liquefied natural gas terminals, work with countries that might have new gas fields and push the expansion of pan-European investments in hydrogen-compatible pipeline infrastructure.

Electricity price brake

The brake will be applied to consumers and companies, with basic consumption subsidized for consumers and small and medium-sized companies, and additional consumption billed according to current market prices. No exact figures were given.

Gas price brake

The measure will be temporary and benefit private households and companies, bringing prices down to more manageable levels. The exact design of the price cap and its guidelines will be determined after the results of an expert commission expected in mid-October.

Economic stabilisation fund reactivation

The government will finance the gas price cap and the liquidity and subsidies required for the electricity price brake through the Economic Stabilisation Fund (ESF). The ESF was originally introduced in 2020 to bail out the airline Lufthansa during the pandemic.

The government will skim off short-term large gains made by some energy companies during the crisis. Companies that are struggling due to the fallout of Russia’s war in Ukraine and are not sufficiently helped by the gas and energy price brakes can also receive government aid.

No consumer gas levy

The government will scrap a planned gas levy that was due to come into effect on Oct. 1 to help companies buckling under high spot market prices replace dwindling Russian flows.

Instead, the government will implement tailor-made solutions for major struggling companies such as SEFE, VNG and Uniper.

Gas vat reduction

The government will lower value-added tax (VAT) on gas from 19% to 7% until Spring 2024 and will extend the tax cut to district heating as well.

(Reporting by Riham Alkousaa; Editing by Matthias Williams and Jan Harvey)