The German government wants to stop energy companies from increasing electricity and gas prices in 2023, Bild newspaper reported Saturday, citing draft legislation.
The government has already ordered a cap on energy prices for next year to quell the energy crisis that threatens household budgets and the viability of many businesses.
What is the government planning?
A draft law on next year’s energy price brake, which was announced by Berlin last month, will also force utility companies to justify any increase in price, for example, extreme volatility in financial markets, Bild reported.
Otherwise, they would be banned from increasing prices in 2023.
The measure, if passed, would mean that hundreds of price increases already announced by energy firms for next year would have to be reversed.
The government wants to prevent energy firms from abusing an €83-billion ($87-billion) subsidy scheme to pay for the price cap.
The price rise justification will be part of the mechanism that firms will need to adhere to receive those subsidies.
“We want to prevent free-rider effects that encourage utility companies to charge higher tariffs,” Michael Kruse, spokesman for energy policy for the neoliberal Free Democratic Party (FDP) parliamentary group, told Bild.
Free riding occurs when one firm benefits from the actions and efforts of another without paying or sharing the costs.