What is your country doing to help you pay the soaring energy bills?
Oct 07,2022 Basen
Spiralling inflation has sparked a cost-of-living crisis across Europe, and governments are stepping in to try to shield households and businesses from the seemingly never-ending surge in energy prices.
For many families these days, it feels like pay cheques are immediately evaporating as inflation drives up the cost of groceries and fuel, landlords increase rent and utility bills keep soaring.
Inflation in the eurozone jumped to a new all-time high of 9.1 per cent in August, fueled by rising energy costs.
There’s no sign of the energy crisis improving any time soon, as Russia said this month it would not fully resume its gas supplies to Europe until the West lifts the sanctions it imposed on Moscow over its invasion of Ukraine.
Belgian prime minister Alexander DeCroo has warned Europe could face up to 10 difficult winters as a result of the standoff.
European Union member states are largely responsible for their national energy policies, and EU rules allow them to take emergency measures to protect consumers from rising costs. Here’s a look at what governments across the continent are doing to help.
Britain’s government is capping wholesale energy bills for businesses this winter as part of a broad package of measures to protect people and companies from soaring energy prices.
Prime minister Liz Truss said the cap will apply for six months from October 1 and will ensure businesses "are able to get through the winter".
She added that shops and pubs will benefit from financial help on their energy bills beyond the initial six-month period.
A similar cap on household energy bills was unveiled earlier this month. The average household “will pay no more than £2,500 (€2,857) per year for each of the next two years,” Truss said, adding that would amount to annual savings of around £1,000 (€1,143) based on current energy prices.
This comes in addition to a £400 (€457) energy bill rebate pledged earlier this year for every household, which will be either paid directly to accounts that have an automatic payment set up towards their energy provider, or which could be separately claimed by the families.
Households that are already struggling to make ends meet and have already received government benefits will also get a one-off "cost of living" payment of £650 (€743) on top of the £400 discount, and pensioners will receive an extra payment of £300 (€343) this winter.
People with disabilities are also set to receive a payment of £150 (€171) to cover the increased cost of living.
Italy approved in early August a new aid package worth around €17 billion to help shield firms and families from surging energy costs and rising consumer prices. It comes on top of some €35 billion budgeted since January to fight the cost of living crisis.
France is also offering a one-off payment to its citizens to help them face hard times, though at just €100 this is considerably lower than in the UK and Italy.
But France has stepped up its game at the source, moving to fully nationalise energy provider EDF and forcing it to limit electricity wholesale price rises.
The government now says it will cap power and gas price increases for households at 15 percent in 2023. It says the average monthly household energy bill will cost an extra €20-25 as a result, compared to an extra €180-200 without such a cap.
The country’s domestic tax on final electricity consumption (TICFE) has also been curbed from €22.50 per megawatt hour to only €1 per megawatt hour for households, and €0.50 for businesses.
A draft seen by Reuters showed the government would extend a €200 bonus paid in July to low and middle-income Italians who did not previously receive it.
Italy has also announced its intention to tax companies profiting from higher energy prices and is promoting a cap on gas prices at a European level to help contain price spikes.
Like Italy, Spain has decided to tax those energy companies profiting from the increase in energy prices and use the money raised to help its citizens pay the bills.
Madrid has already cut value-added tax (VAT) on energy bills from 21 percent to 10 percent, while also cutting an existing tax on electricity from 7 percent down to 0.5 percent.
Like Portugal, Spain currently enforces a one-year long cap on gas prices, agreed by the European Commission, which ensures they remain lower than an average of €50 per megawatt-hour.
In June, Danish lawmakers agreed on a cash handout to the elderly and other measures totalling 3.1 billion Danish kroner (€417 million), including a cut to a levy on power prices.
The parliament has also approved a so-called "heat cheque" worth 2 billion Danish kroner (€269 million) that will be paid to over 400,000 households hit hard by rising energy bills.
Germany, which has struggled to curb its heavy dependency on Russian gas, has pledged to lower the value-added tax on natural gas from 19 per cent to 7 per cent until the end of March 2024.
Germany also approved two relief packages for a total of €30 billion to help its citizens with rising energy prices this year.
The German government will offer a one-off energy price flat rate of €300 to all taxpayers, transferred to them via their employer's payslip. Families receiving child support will get an extra €100 per child, while people on benefits will receive a €200 one-off payment. Those on housing assistance will get a €270-worth top-up for people on housing assistance.
The country is also offering subsidised public transport tickets.
However, German households will have to pay almost €500 more a year for gas due to a new levy - to be imposed from October - helping utilities cover the cost of replacing Russian supplies.
The Dutch government, which is expecting inflation to hit 5.2 per cent this year, is offering eligible households a one-off energy allowance of €800.
It's also lowering VAT on energy from 21 per cent to 9 per cent and cutting duty on petrol and diesel by 21 per cent, a cap which will remain in place until the end of the year.
Greece has spent about €7 billion in power subsidies and other measures since last September to help households, businesses and farmers pay their electricity and gas bills.
The subsidies absorb up to 90 per cent of the rise in monthly power bills for households and 80 per cent of the rise for small and medium-sized firms.
As energy market prices increase around the world, Norwegians will only pay a set amount decided by the government last year. According to a scheme introduced by the government in 2021, Norwegians only pay bills in full when prices are under 70 crowns (€7) per kWh. When energy bills pass that threshold, the government covers 80 per cent of the total.
Despite this, Norwegians are apparently still struggling to pay their bills, and the government is mulling other options to help out households this winter.
Bulgaria in May approved a 2 billion levs (€1 billion) package aimed at shielding companies and low-income consumers from the surge in energy and food prices caused by the conflict in Ukraine.
Since July, the government is also offering a discount of 0.25 levs (€0.13) per litre of petrol, diesel and liquefied petroleum gas, and methane until the end of the year and it’s scrapping excise duties on natural gas, electricity, and methane.
Finland’s government said on September 4 that it plans to offer up to €10 billion of liquidity guarantees to the energy sector to help prevent a financial crisis.
"The government's programme is a last-resort financing option for companies that would otherwise be threatened with insolvency," Finland's prime minister Sanna Marin told a news conference.
Hungary has capped retail fuel prices at 480 forints (€1.19) per litre since November, well below current market prices. The measure led to such an increase in demand that the government was forced to curb eligibility for the scheme.
Sharp rises in gas and electricity prices have also forced the government to curtail a years-long cap on retail utility bills, setting the limit at national average consumption levels, with market prices applying above that.
Hungary has also imposed an export ban on fuels and recently loosened logging regulations to meet the increased demand for solid fuels such as firewood.
Poland has announced tax cuts on energy, petrol, and basic food items, as well as cash handouts for households. It has also extended regulated gas prices for households and institutions like schools and hospitals until 2027.
The government in July agreed on a one-off payment of 3,000 zlotys (€633) to households to help cover the rising cost of coal. Prime Minister Mateusz Morawiecki has said the total cost of curbing energy prices in Poland will reach around 50 billion zlotys.
Romania’s coalition government has implemented a scheme capping gas and electricity bills for households and other users up to certain monthly consumption levels, and compensating energy suppliers for the difference. The scheme is due to be in place until March 2023.
Prime Minister Nicolae Ciuca estimated in February the support scheme would cost some 14.5 billion lei (€3 billion), but analysts now expect it to exceed €10 billion euros.
Sweden has set aside 6 billion Swedish crowns (€559 million) to compensate households worst hit by the surge in electricity prices.
Prime minister Magdalena Andersson said on September 3 that Sweden will offer several hundred billion Swedish crowns in liquidity guarantees to energy firms to help avert a financial crisis after Gazprom shut the Nord Stream 1 gas pipeline.
Solar power is a better bargain, some countries offer tax rebates and other financial incentives that further sweeten the deal. Going solar makes the most sense if your roof gets a lot of unobstructed sunlight.For more details about solar energy, please contact Basen expert.