1. Electricity Cost Subsidy Act - SKZG
After first concrete announcements in the late summer/early autumn of this year, the Federal Act on the Temporary Introduction of an Electricity Cost Subsidy for Households (Electricity Cost Subsidy Act/SKZG), Federal Law Gazette I 2022/156, was adopted by the National Council in October and came into force on 25 October 2022. The declared goal of the act is to reduce the burden on households. The electricity cost subsidy is granted to natural persons “with payment obligations under an electricity supply contract". For the support of low-income households, the law provides for an additional subsidy pertaining to grid costs.
This is "classic" financial support legislation: The federal government has legal capacity as it takes action, and (in principle) there is no legal entitlement to support (sec. 3 SKZG). The subsidies are "tax-exempt" and are not considered subject to setoff under the Social Assistance Principles Act (SHGG). Furthermore, provisions are in place to govern monitoring (sec. 12 SKZG) and reclaiming (sec. 9 SKZG) in case of unjustified receipt of the subsidy.
2. Financial support: who, how, what?
The central provision of the SKZG is contained in sec. 5: According to it, the electricity cost subsidy will be granted for the period from 01 December 2022 to 30 June 2024 for an annual basic quota of up to 2,900 kWh. If consumption is lower, the electricity subsidy will be limited to actual consumption. If consumption is higher, no subsidy will be granted for the quantity exceeding the threshold. In the event of a change of supplier, the basic quota is granted on a pro rata basis.
The amount is based on the difference between the agreed energy price and the lower threshold of the general market value, which is fixed at 10 cents/kWh. If the agreed energy price exceeds 40 cents/kWh, the subsidy will be capped at 30 cents/kWh. If the agreed energy price is below 10 cents/kWh, no electricity subsidy will be granted. Incidentally, the agreed energy price is legally defined as the price to be paid by a household for the supply of electricity in cents/kWh, including all components charged, in particular the energy price, the basic price and all discounts that affect the energy price. Grid costs, taxes, levies, etc. are not included.
Adjustments to both the basic quota and the general market value may be made by ordinance issued by the Federal Minister for Climate Protection, Environment, Energy, Mobility, Innovation and Technology (BMK) in consultation with the Federal Minister of Finance (BMF).
For households where more than three persons are registered as having their main residence at the address, there is an additional quota (sec. 6 SKZG) although this is not specified in the law itself. In this context, the preparatory materials for the bill mention a so-called "top-up quota" (IA 2827 NRBlg XXVII GP, 7). However, the law does not specify whether, how and where this is to be communicated and defined in more detail.
The grid cost subsidy islinked to the Ordinance on Exemptions in the Promotion of Renewable Energy Act (EAG-Befreiungsverordnung), which in turn uses to the broadcasting fee exemption (“GIS exemption”) for reference. Due to the annual system charge ordinances, the subsidisation period is defined slightly differently here, from 01 January 2023 to 30 June 2024. A rate of 75% of the system charges invoiced is reimbursed, fees for other services are not included (e.g. reminder fees; cf. sec. 58 of the Electricity Sector and Organisation Act/ElWOG 2010).
3. Settlement procedure & conclusion
Unlike the climate bonus, there are no (more or less) direct distributions to the households receiving support. Settlement is done directly via the electricity suppliers and, where socially disadvantaged households are concerned, via the grid operators, too; these are reimbursed for the related costs by the federal government after notification (sec. 11 par. 1 SKZG). The federal government will grant a one-time lump-sum payment, which is to be determined by ordinance, for the implementation of the processes required to manage this.
Incidentally, the SKZG does not mention how a subsidy under the Energy Cost Equalisation Act/EKAG (Federal Law Gazette I 2022/37) affects the agreed energy price pursuant to the SKZG. At first glance, this may be understandable, as the € 150 voucher provided under the EKAG was, after all, designed as one-off assistance (sec. 2 par. 2 EKAG). However, it should be noted that the EKAG will be in effect until 31 December 2029, and thus even longer than the SKZG, which is currently intended to expire on 30 June 2025.
These and other unanswered questions will probably be clarified in practical application sooner or later. In any case, suppliers are likely to see more of a challenge than a source of support in the new procedure they have to manage.
If you have any questions on these or any other energy law issues, the KWR Energy Team is always available to help.