Costs and benefits premature release of the electricity price brake

Costs and benefits: premature release of the electricity price brake? Treasury considers options

The Ministry of Finance analyzes “every day” whether it makes sense to prematurely adjust the electricity price brake or let it expire. Finance Minister Magnus Brunner (ÖVP) declined to commit at a news conference on Friday. In principle, he is “open to any measure that eases the budget”. It is now necessary to see who the measure benefits and costs, if it fuels inflation and if it “makes sense to leave”.

“Probably 15 cents would be enough”

On Thursday night, in the ORF business magazine “Eco”, the head of Wifo, Gabriel Felbermayr, spoke in favor of halving the state subsidy for domestic electricity prices. “If the situation continues as it is now, it would probably be wise to go back to the law and adjust the 30 cent subsidy that is being given… in the market, lower the price level in general,” says Felbermayr.

The target is an electricity price of 10 cents per kWh

The electricity price brake was decided to support households when electricity prices multiplied after Russia’s attack on Ukraine. It provides for households to receive a subsidy of up to 30 cents for the first 2,900 kWh of electricity per year. The target is an electricity price of 10 cents per kWh, but if suppliers demand more than 40 cents, households have to pay the difference – just as they have to pay the full price for electricity consumption in excess of 2900 kWh. In the meantime, however, the price of electricity has fallen sharply again, although not yet at pre-crisis levels. The electricity price brake applies until mid-2024.