anticipate shifts in electricity and gas costs for homeowners in the upcoming year. For instance, the energy price caps set to expire at year's end will result in an increase in grid charges for electrical power. Additionally, the CO2 levy for gas will rise at the beginning of the year, while the VAT reduction for gas and heating will end in March. This will mean charging 19% instead of the previous 7%.
However, suppliers have announced decreases in electricity prices at the turn of the year to offset these increases. For a typical three-person household with a 4,000 kWh yearly consumption, this equates to an average 13% reduction in total cost. Although there are also 83 rate increases within this set, resulting in additional costs of around 93 euros.
It's worth noting that a mere 24% of total household electricity consumption is still supplied via basic tariffs. Yet, according to the Federal Network Agency, basic suppliers still maintain a solid position in their distribution zones. They continue to supply 37% of household electricity securing contracts outside basic supply arrangements.
Wholesale electricity prices have fallen recently, instigated by cheaper coal, gas, and expanded renewable energy production. A stable or mildly decreasing trend is expected in the coming months. However, there remain uncertainties with energy projections, particularly with regard to renewable energy feed-ins and the persisting gas market crisis.
Under normal circumstances, electric utility costs are forecasted to stay the same or even decrease for existing customer contracts. In contrast, grid fee increases will affect both current and new customers starting from January 2024.
Similarly, basic gas suppliers have also announced average reductions of 15%. This is in contrast to 56 increase announcements, averaging 12%. Check24 estimates that gas costs for an annual consumption of 20,000 kWh will climb to an average €2,537 in 2024 (17% more than in 2023). This is influenced by the VAT hike, the depletion of gas price brakes, and increased CO2 levies. On the flip side, network usage fees have declined slightly, as reported by Check24.
Mirroring trends seen in the electricity market, wholesale gas prices have plummeted significantly. This is due to well-stocked gas storage facilities and an ample supply of liquefied natural gas (LNG) and Norwegian gas. As long as moderate weather persists and there are no global disruptions in LNG supply, Europe and Germany may continue to face a relatively comfortable situation with gas prices. However, sudden frigid weather and depleting LNG availability could potentially spark a dramatic price increase.
What the gas market price situation means for end users depends on suppliers' procurement strategies. Suppliers with longer-term trades may see costs escalate; meanwhile, those with short-term acquisitions could benefit from lower market prices.
Christina Wallraf, an energy expert at the consumer advice center in North Rhine-Westphalia, encourages consumers to explore different tariffs and switch providers as announced increases could save households money. The best course of action involves analyzing current electricity and gas bills, understanding the notice period, and checking for policies on tariff changes. Consumers should also consider energy-efficient appliances and habits to further reduce energy consumption. Finally, homeowners can examine green energy solutions to lower their carbon footprint and personal financial impact.
