AT A GLANCE: How governments in European countries deal with expensive energy and high inflation

CR

Until recently, the main help in the fight against expensive energy was supposed to be the so-called saving tariff, thanks to which, depending on consumption, some households could receive a subsidy of up to 18 thousand crowns for the upcoming heating season.

This year’s aid is to be paid through the electricity supplier, with the contribution ranging between 2,000 and 3,500 crowns.

Now, however, the government has come up with a new measure in the form of capping electricity and gas prices for households and small and medium-sized businesses.

The government has capped the price of electricity at CZK 6 per kWh, the price of gas at CZK 3 per kWh including VAT. The setting of the price ceiling will already have an impact on the amount of advances in November. According to Minister of Finance Zbyňek Stanjura (ODS), this should cost the state coffers a maximum of 130 billion crowns.

CLEAR: How the government capped energy prices

Homemade

The government has prepared support in the amount of 30 billion crowns for large consumers of electricity and gas.

National capping of energy prices and compensation for large companies should complement EU measures at the pan-European level. The European Commission came up with their form at the suggestion of the European Ministers of Energy. EU ministers will discuss its proposal again on September 30.

Another government aid is the remission of the fee for renewable energy sources (RES) in the period from October to December. In practice, this means that for every megawatt hour consumed, the customer saves 600 crowns.

The state has also been paying families a one-off payment of 5,000 crowns per child up to 18 years of age since August. The condition is that the family’s income did not exceed one million crowns gross last year.

Last but not least, the state guarantees citizens that housing costs will cost them a maximum of thirty percent of their income, 35 percent in Prague. The state will cover the costs above the given threshold through housing allowance, which people have to apply for.

The government will increase the norms for housing allowances

Economy

Slovakia

In February, the eastern neighbors reached an agreement with the largest electricity producer in the country, the company Slovenská elektrárny, to fix the price of electricity for two years, at the amount of 61 euros (1,500 CZK) per MWh. The measure should also apply for the years 2023 and 2024. However, it has not yet been legally decided.

In the spring, the Slovak government also approved the first set of contributions for around 22 million euros (548 million CZK) for certain groups of the population as a partial compensation for high inflation.

Now Slovakia is preparing a system of compensations and other measures against the significant increase in energy prices for households, it is also considering so-called price ceilings along with a program to help certain groups of consumers, including businesses.

Austria

Already in January, Austria presented a set of measures to help households face rising energy costs.

The total value of these measures is approximately EUR 1.7 billion (CZK 41.7 billion). Almost all households in Austria receive a one-time contribution of 150 euros (almost CZK 3,700) under these plans.

In June, the government introduced another set of measures to help households and businesses deal with the effects of high inflation.

They include, among other things, a one-time contribution of 500 euros (over 12 thousand CZK) for each adult and 250 euros for each child. The Cabinet stated that these measures will amount to approximately six billion euros (148.5 billion CZK) this year.

Austria partially caps the price of electricity for households

Economy

At the beginning of September, Austria announced that it would cap the price of electricity for households at 80 percent of last year’s average consumption. For consumption above this limit, people will pay the market price. The Austrian government allocated 2.5 billion euros (61.46 billion CZK) for the measure.

Germany

In March, the German government approved two aid packages for the needy, families, low-income citizens and commuters worth over 30 billion euros (CZK 736 billion).

People will also receive a one-time tax benefit of EUR 300 (CZK 7,375), families with children will receive a one-time bonus of EUR 100 (CZK 2,460) and recipients of social benefits a one-time sum of EUR 200 (CZK 4,920).

On the other hand, from October, households will have to pay an extra gas procurement fee for gas, which is supposed to protect the supplier from insolvency. The amount of the fee is roughly 2.4 cents (59 pennies) per kilowatt hour (KWh), which can cost a family of four as much as 480 euros (11,780 CZK) per year.

Following this, the government announced just days later that it would temporarily reduce the value-added tax on gas from 19 per cent to seven per cent to cushion the impact of the new, additional charge.

Recently, Berlin announced another package of measures in the amount of 65 billion euros (1.6 trillion crowns), which is intended to relieve residents and businesses from rapidly increasing inflation and the associated high energy prices.

The measure includes a proposal to extend discounts on public transport and tax breaks in the amount of 1.7 billion euros (41.7 billion crowns) for 9,000 energy-intensive businesses.

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Economy

It will also improve families with children, who in Germany, regardless of income, receive a flat-rate monthly child benefit.

For the first two children it is 219 euros (5360 CZK) each, for the third the amount is 225 euros and for each additional 250 euros. From January, the amount for the first two children will increase by 18 euros per month for each. For a family with two children, this means an additional 432 euros (CZK 10,570) per year.

People who receive housing benefits from the state will receive a one-off allowance for heating. A one-person household should receive 415 euros and a two-person household 540 euros. An additional 100 euros is calculated for each additional person in the household.

Poland

The Polish government plans to postpone the liberalization of gas prices for households until the end of 2027. Households that use coal for heating will pay a one-time contribution of three thousand zlotys (about 15,440 crowns).

The government also approved that households using coal will be able to buy it at a guaranteed price of 996 zlotys (about 5,300 crowns) per ton.

Companies that will sell coal to customers at this price will receive compensation from the state for lost profit of up to 750 zlotys per ton. Coal accounts for 80 percent of electricity production in Poland.

Poland also reduced the VAT rate on basic foodstuffs to zero from the standard five percent.

Hungary

In view of rising inflation, the Hungarian government has extended the ceiling on some basic food prices until October 1st.

In addition, it has already capped the price of gasoline at 480 forints (roughly 29 CZK) per liter since last November. The measure is continuously extended, the current validity expires on October 1.

The price of electricity and natural gas paid by consumers in Hungary is fixed and determined by legislation.

However, as of August 1, the generality of this regulation ended, and now only households that do not exceed the average consumption pay the discounted price. Those who exceed the limit will pay more.

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Economy

In the case of electricity, the average annual consumption is considered to be 2523 kWh. As part of this, the household will pay HUF 36 per kWh.

If he exceeds this consumption, he pays HUF 70.1 per kWh. For gas, the annual average is set at 1,729 cubic meters with a price of HUF 102 per m3. If the household exceeds this, they pay up to seven times the price (747 forints).

The country declared an energy emergency in July, which includes a ban on energy exports, and plans to increase domestic natural gas production.

Great Britain

In May, the British government announced the introduction of an extraordinary 25 percent tax on the profits of oil and gas companies.

Around eight million British households with the lowest incomes will receive an allowance of £650 (CZK 18,800).

In autumn, eight million elderly households will receive a 300-pound (CZK 8,700) allowance for fuel. People with disabilities will collect £150 (CZK 4,300) as an additional housing benefit.

The new British Prime Minister, Liz Trussová, is also going to support companies, with an amount of 40 billion pounds (1.1 trillion CZK), to help them cope with the sharp rise in energy prices. The plan envisages either capping prices or reducing them by a specified percentage.

The new government also plans to help households. In this case, prices are to be frozen at current levels for about 18 months and energy firms are to receive state-backed loans.

France

Employees are to receive a tax-free bonus to support purchasing power of up to 600 euros (roughly CZK 14,600). President Emmanuel Macron also promised more money to the self-employed.

Further investments are to flow into healthcare and education. The proper minimum pension is to be 1,100 euros in the future, and support for single parents is also to be increased.

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Europe

Earlier, the government decided that it would limit the increase in electricity prices to only four percent this year instead of the expected 45 percent. For next year, the price increase limit will be relaxed to 15 percent. According to the Ministry of Energy, it should cost the state 16 billion euros (CZK 391.55 billion).

Italy

At the beginning of August, the local cabinet approved a new aid package worth approximately 17 billion euros (417.2 billion CZK), which is intended to help companies and families cope with expensive energy and rising consumer prices.

As for specific measures, in July the state gave 200 euros (4,900 CZK) to people with a maximum annual income of 35,000 euros (858,000 CZK). But the government plans to extend the allowance to the middle class as well.

Norway

Norway has partially subsidized household electricity bills since December, now covering 80 percent of the portion of the electricity bill that exceeds a certain amount. In September, this aid will be extended to 90 percent. The system should be valid at least until March 2023.

Norway will cooperate with the EU to ensure stability in gas supplies

Economy

Spain

On the Iberian Peninsula, i.e. not only in Spain, but also in Portugal, in July they introduced joint measures against rising electricity prices – they capped the price of gas used for electricity production for a year. The negotiated price ceiling is 48.8 euros per MWh on average.

This is the so-called Iberian model, the implementation of which was also considered at the pan-European level. However, the EU ministers did not agree on it in the end.

In Madrid, for example, they reduced the VAT on energy bills from 21 percent to 10 percent and at the same time reduced the tax on electricity from seven percent to 0.5 percent.

The article is in Czech

Tags: GLANCE governments European countries deal expensive energy high inflation

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