The energy price cap also imposes obligations on landlords

The proposed laws for price caps on electricity, gas and heating submitted by the German Federal Cabinet came into force on 1 January 2023 in the form of the "Law on the Introduction of an Electricity Price Cap and on the Amendment of Further Energy Law Provisions" (StromPBG) and the "Law on the Introduction of Price Caps for Conducted Natural Gas and Heating" (EWPBG). The laws essentially provide for financial relief for private and commercial end consumers due to the drastic increase in energy prices in 2022. The price caps currently provide for financial relief for the entire calendar year 2023. It remains to be seen whether the government will extend the price caps.

 

Who benefits from the price caps?

Basically, all end consumers with very high energy costs bills. The various price caps divide final consumers into two groups depending on their consumption. The threshold for classification into group 2 for heating and gas is an annual consumption of more than 1.5 million kilowatt hours supplied by means of so-called registering power metering (Registrierende Leistungsmessung); for electricity it is 30,000 kilowatt hours or more. The thresholds are provided for each respective supply unit. Apart from this classification, the law does not differentiate between private households and businesses.

 

How is the amount of financial relief calculated?

The government sets relief quotas for the respective group of end consumers. Within the relief quota, fixed energy prices are guaranteed (reference price). The relief quotas and energy prices are set as follows:

	Gas		Heating		Electricity
Grouping	1	2	1	2	1	2
Relief quota	80% of the annual consumption forecast in 09/2022	70% of the measured annual consumption 2021	80% of the annual consumption forecast in 09/2022	70% of the measured annual consumption 2021	80% of the forecast annual consumption	70% of the measured annual consumption in 2021 or the projected annual consumption
Reference price	12 ct /kWh (gross)	7 ct /kWh (net)	9,5 ct /kWh (gross)	7,5 ct /kWh (net)	40 ct / kWh (gross)	13 ct /kWh (net)

 

The amount of the monthly relief amount then results from the monthly difference between the energy price agreed with the energy supplier and the guaranteed reference price, but only up to the amount of the relief quota.

 

Absolute and relative caps for companies

For companies, the total amount of the financial relief granted by the government is limited by absolute caps and linked to additional conditions. In addition, to companies relative caps apply, which may reduce the actual financial relief. The caps of the financial relief are calculated on the basis of all grid access points of one company as well as of possible additional companies. The relevant caps are to be determined by additional criteria to be set by the responsible authority. Relevant criteria are (i) the impact of the respective end consumer on the high energy costs, (ii) the company's affiliation to an industry listed in Annex 2 of the respective law and (iii) the proof of being an energy-intensive end consumer within the meaning of the law.

For companies without "special concern", the general cap is 2 or 4 million euros. If additional criteria are met, the absolute cap can rise to 50 to 150 million. The relative cap differs from this absolute cap. According to this, only a defined share of the crisis-related additional energy costs may be taken into account.

 

Additional obligations for companies

The law also contains further regulations of which companies should be aware: For example, a ban on bonuses and dividends was introduced if the financial relief exceeds 50 million euros. In the case of a financial relief between 25 and 50 million euros, the agreed bonuses may not be increased. In the case of a financial relief of up to 25 million euros, companies may continue to pay out bonuses and dividends. Companies may continue to choose a so-called "opt-out" until 31 March 2023 and waive the financial relief of more than 25 million euros. In this case, companies may continue to pay out bonuses and dividends without restriction.

Companies are also subject to notification obligations if the monthly financial relief amounts exceed 150,000 euros (or 100,000 euros for the entire calendar year 2023) or the financial relief exceeds 2 million euros. Ultimately, the law attempts to enforce a job retention obligation by linking the amount of the financial relief to job security.

 

How does one obtain the financial relief?

The financial relief is granted automatically by the respective energy supplier. No application is necessary. As of 1 March, end consumers pay correspondingly lower monthly instalments to their suppliers. However, the aforementioned notification obligations of the companies must be observed.

 

How do tenants get the financial relief? / Obligation of landlords to pass on the financial relief

Tenants are often not end consumers in the sense of the two laws, but rather the landlords. In this case, the landlords receive the financial relief via the respective supplier. However, landlords must pass on the financial relief to their tenants accordingly, within the framework of the operating costs statement. Under certain conditions, landlords must also adjust the advance payments for operating costs accordingly.

End consumers will be informed of the calculated financial relief by their suppliers by 1 March 2023. For their part, landlords are obliged to inform tenants of the origin, amount and duration of the financial relief and need to pass on the financial relief to tenants on a pro rata basis as part of the operating cost statement.