German Households Pay 31% More for Energy Than Pre-Crisis

(Bloomberg) -- German households are still paying 31% more for energy than they did prior to the 2022 crisis, according to a study, highlighting an urgent challenge facing the new government.

A model three-person household currently spends €5,407 a year on energy, up from of €4,121 in 2021, an analysis by comparison portal Verivox showed. Heating with oil and gas has become 35% and 74% more expensive respectively, while electricity bills have gone up by 17%.

Russia’s invasion of Ukraine and its subsequent reduction of pipeline gas flows sent Europe’s wholesale energy prices soaring. Although they’ve since come down, they are still at high levels. In Germany, taxes and grid fees make up the majority of the price paid by consumers, and have also risen.

The increased fees are a difficult issue. They are rising because the grid needs to be expanded to allow the transport of renewable energy from the north to the south and make electricity cheaper eventually. But they can be a burden on households and weaken confidence in the energy transition.

In the run-up to Germany’s federal election on Sunday, most parties pledged to lower energy bills. The winning conservative CDU/CSU alliance, which now has to form a coalition, has promised to cut costs by lowering taxes and grid fees, but financing those reductions could pose a challenge.

“A return to the energy cost level seen before the outbreak of the war in Ukraine is currently not in sight,” said Thorsten Storck, energy expert at Verivox. “In view of the renewed rise in wholesale prices, higher grid costs in the electricity and gas sectors and rising CO2 prices, it’s more likely that energy costs will continue to rise.”

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