German energy bills to rise by another 480 euros a year under gas levy

Germany's incoming gas price levy, which is meant to distribute the high costs of replacing Russian gas among all end-consumers from October, has been set at 2.419 euro cents per kilowatt hour (kWh), according to Trading Hub Europe.

For an average family of four, this will amount to an additional annual cost of around 480 euros.

The levy, planned by the German cabinet in a bid to help Uniper and other importers cope with soaring prices due to reduced Russian supply, is to be imposed from Oct. 1, 2022, and remain in place until April 2024.

Speaking at a regular news conference in Berlin on Monday, a government spokesperson said the levy was in line with what the government had been expecting.

German inflation is already running at an elevated 8.5% and the increase in household energy bills will push the cost of living up further.

"The gas levy is expected to increase inflation, including the value-added tax, by almost one percentage point," said Joerg Kraemer, chief economist at Commerzbank.

Jens Suedekum, an economics professor at Duesseldorf's Heinrich Heine University, said inflation could reach double digits in the autumn and called for further relief measures for people on low and medium incomes.

"The state cannot cushion high energy prices everywhere. That is impossible. But it can provide targeted relief where it is needed most," Suedekum said.

German Economy Minister Robert Habeck assured citizens that further relief measures were in the pipeline, after Chancellor Scholz promised an additional relief package at his summer press conference on Friday.

"The levy is a consequence of Putin's illegal war of aggression on Ukraine and the artificial energy shortage caused by Russia," Habeck added in a statement.