Federal cabinet adopts December immediate assistance for gas and heating

At today’s cabinet meeting, the Federal Government initiated a draft act on immediate assistance for gas and heating presented by the Federal Ministry for Economic Affairs and Climate Action. The legislation aims to give tangible help to households and businesses with an annual consumption of up to 1.5 million kWh. The Federal Government’s proposal implements the first part of the recommendations in the interim report from 10 October 2022 by the Commission of Experts on Gas and Heating set up by the Federal Government. The joint working group of the Federal Chancellery, the Federal Ministry of Finance and the Federal Ministry for Economic Affairs and Climate Action is working intensively on the implementation of the remaining elements, specifically the brakes on gas and electricity prices, which are to be adopted in a further step.

Federal Minister for Economic Affairs and Climate Action Robert Habeck said, “Russia’s attack on Ukraine in violation of international law has dramatically worsened what was already a tense situation on the energy markets, and has resulted in extreme price rises for households and companies in the course of 2022. Whilst wholesale prices have recently fallen, it is unclear how things will develop. Private consumers and businesses are increasingly suffering from these high prices, and urgently need help. The December immediate assistance adopted by today’s cabinet is therefore a very important first step. Further steps will follow, and we in the Federal Government are working flat out to implement the brakes on gas and electricity prices. All of these issues are highly complex, and we need all the stakeholders to pull in the same direction so that the assistance can take effect as quickly as possible.”

The December immediate assistance offsets some of the increases in energy bills in 2022 and bridges the period until the planned introduction of the brake on gas prices in the spring.

Households and smaller companies which are billed via “standard load profiles” and consume less than 1,500 megawatt-hours of gas a year will be forgiven their payment of their December instalment.

Specifically, final consumers of gas will not be required to pay the contractually agreed advance payment or instalment in December 2022. The instalments for December will not be charged. Amounts that the final consumers still have to pay will be included in the next bill from the gas provider.

In terms of the end-of-year invoice, this works as follows: the assistance is calculated on the basis of one-twelfth of the annual consumption forecast by the supplier for the take-off point in September 2022, and of the gas price in December.

The contractual structures in the heat sector are different from those for gas, so that the December assistance takes the form of a flat-rate payment based on the level of the instalment paid in September plus an adaptation factor.

In the case of rented accommodation, there is the special point that many tenants do not have their own gas meters in their apartment. In such cases, there is no direct contractual relationship between the gas supplier and the tenant; rather, the billing takes place between the gas supplier and the landlord, and then between the landlord and the tenant. For this reason, special features apply to the December assistance for tenants in this position.

Many landlords have yet to adapt the monthly advance payment to reflect the higher energy costs. In this case, the higher prices in the billing of running costs for 2022 will reach the tenants in 2023. The Federal Government’s proposal therefore envisages that, where the monthly advance payments have yet to be increased, landlords should pass on the assistance to their tenants in the next annual bill for running costs. In this way, tenants will benefit from the assistance at the time when they may have to make supplementary payments to offset the price increases of 2022.

Other special features apply to tenants whose advance payments for running costs have already been increased due to the rise in gas or heating costs over the last nine months before the entry into force of the act. These tenants do not have to pay the increased amount in December. In buildings with gas-fired central heating, one-quarter of the running costs accruing in December 2022 do not have to be paid if the rental contract was agreed in the last nine months. This is because it can be assumed, in the case of new rental contracts, that the level of payments of running costs already corresponds to the current price level.

In order to finance the assistance for the month of December, the energy suppliers and heat supply companies have an entitlement to reimbursement or an advance payment from the Federal Republic of Germany. This affects approximately 1,500 suppliers of gas and heat. They have to apply via their bank to KfW for their entitlement to be paid out following an audit procedure by an appointed service provider.

The law is now to pass swiftly through the parliamentary procedure. The aim is for gas and heat suppliers to be able to apply for funding from mid-November 2022 so that they receive the money in time. All the stakeholders – suppliers, banks and government agencies – are called on to work together so that the assistance can be paid on time.

You can find a list of FAQs (in German) here.

You can find the draft legislation for the December immediate assistance here.