Households and businesses in Germany are set to save a little more on their home utilities next year. The government has announced that it will retroactively extend gas price cap rates to January and February 2023.

January and February gas cap announced in Germany

Households and businesses are now set to receive retroactive gas price cap rates for their January and February energy costs. While Germany’s gas price cap (Gaspreisbremse) will only come into effect from March 2023, according to German broadcaster ZDF the government will retroactively apply gas price cap rates to cover January and February energy costs.

The price cap is designed to place no extra financial burden on pensioners, workers, families and small businesses who are struggling with their bills and is intended to last until the spring of 2024. The money for the cap will come from the federal government’s economic stabilising fund, which was set up in 2020 to help support businesses during the coronavirus pandemic.

The gas price cap is one part of Germany’s 200-billion-euro aid plan to help with the energy crisis. The government’s relief plan to cover household energy bills in December also remains in place.

How will the gas price cap work in practice?

Under the gap price cap, 80 percent of a household's usual consumption (calculated according to the previous year's consumption) will be capped at 12 cents per kWh, while any consumption above this will be charged at the going market rate. The state will then make up the difference between the capped price and prices paid by gas importers. 

According to GASAG, Germany's predominant natural gas supplier, the average two-person household uses 2.000 kWh per year. Under the cap, 1.600 kWh would be charged at no more than 12 cents per kWh, while the remaining 400 kWh would be subject to the market rate. 

How much you stand to save depends largely on when your energy contract was concluded: people who opted for fixed-rate contracts prior to the current crisis will understandably save less than those with newer, more expensive contracts.

Businesses in Germany must meet a number of conditions in order for them to benefit from the price cap. Companies must continue existing operations in Germany and keep 90 percent of jobs within the country.

While other European countries struggle to find funds, Germany’s 200-billion-euro energy crisis relief package has garnered criticism at EU level, with top commissioners accusing Olaf Scholz’s government of disrupting the level playing field of the EU. The EU parliament is still in the process of outlining a potential EU-wide gas price cap.