The war in Ukraine has led to a significant rise in primary energy prices, particularly for natural gas. This is now also having a drastic impact on electricity prices for businesses and consumers alike. The Federal Government therefore now intends to introduce an electricity price cap alongside the gas price cap, to which similar basic principles should apply. If one considers the economic background to the price rise, it becomes clear that interventions in electricity suppliers’ revenue generation that are in line with competition rules, and a sensible relief scheme for businesses and households, are the correct responses. By contrast, the electricity market design is functioning; however, it must be further developed in the medium term.
At a glance
The Monopolies Commission recommends that the response to price rises in the electricity market should be targeted and in line with market principles:
- The electricity market design should be retained, but further developed in the medium term.
- The skimming of windfall profits from conventional electricity generators should – as far as possible – be carried out in a uniform manner, taking futures contracts into account.
- The top priority in providing relief to consumers must be to ensure that incentives to save energy are not undermined. At the same time, the financial needs of the households to be supported should be taken into account.
