Price brake law established in Germany to address the effects of the energy crisis on the population

To fund their efforts against the effects of the energy crisis, multiple countries have passed laws attempting to skim off so called “surplus revenues” from companies allegedly benefitting from the energy crisis. The German parliament also chose to follow this path by passing an Electricity Price Brake Act (Strompreisbremsegesetz -StromPBG) focusing on the electricity sector and a Natural Gas Heat Price Brake Act (Erdgas-Wärme-Preisbremsengesetz – EWPBG) targeting the heating sector on December 15^th 2022. Both acts came into force on December 24^th, 2022. The following overview will focus on the StromPBG, noting that the EWPBG due to the similar approach may cause corresponding obligations for affected companies.

The StromPBG’s approach is a widespread one, consisting of a profit skim off, a balancing and consumer/employee protection mechanism. The following are key regulations of the StromPBG:

• A monthly relief amount is to be granted by electricity supply companies to their end consumers by means of an automatic deduction from the electricity bill. The deduction in costs is capped for a consumption amount of up to 80 per cent for private consumers and 70 per cent for industrial consumers compared to their consumption in the previous year. To incentivise consumers to save energy, consumption above the threshold of 80/70 percent is charged at the full regular electricity price.

   

• Operators of electricity plants must pay 90 percent of the surplus revenue generated through windfall or excessive profits on the electricity markets to the grid operator. 10 percent of revenues are left with the plant operator to create an incentive for effective market behaviour. An exemption from this obligation is provided for certain types of electricity plants generating renewable energy up to a capacity of 1 MW.

   

• The skimmed surplus revenues are used to finance the monthly relief amounts for the end consumer. The mechanism is in force for the limited period from 1^st December 2022 until 30^th June 2023, with an option for extension until 30 April 2024 at the latest.

   

• The affected companies may further be subject to accounting and account management obligations, job retention and other retention obligations and may even face a ban on the right to pay bonuses and dividends.

While the general goal of cushioning the impacts of the energy crisis is certainly welcome, this new act raises various questions with regard to its interpretation and compatibility with other laws, especially EU law, resulting in a corresponding need for legal consultation amongst (potentially) affected companies.