Electricity bills: when will they stop paying subsidies

The official announcement of electricity tariffs will be made tomorrow, Friday 20 January. At the same time, the opinion of manufacturers and suppliers agrees that companies will introduce a rate of 25 eurocents per kilowatt-hour next month.

A sharp decline of at least 40% is estimated by domestic electricity retail factors to be announced by suppliers for February ahead of management announcements tomorrow. A significant drop in market prices for electricity and natural gas has a domino effect on competitive fees announced by electricity suppliers.

Favorable conditions in the European natural gas markets, with TTF de-escalation to the levels of 63 and 65 euros / MWh, reduce the cost of electricity and, accordingly, the forecasts of suppliers for wholesale electricity prices in the next month.

Recall that January “passes” when the average nominal tariffs of providers are formed at the level of 44 cents per kWh – hence the decrease by 40% (more precisely by 43%), if the above forecast is confirmed. Of course, behind the average current fee is a wide range of offers from companies, with the cheapest provider for January at a price of 47.7 cents per kWh (with a permanent discount) and the most expensive one at a price of 51.8 cents per kWh.

Accordingly, a large range is expected in offers for February: from 20-22 cents per kWh up to 30 and above.

Tomorrow electricity providers will announce their February price lists, which will include the January drop in the wholesale electricity market, as well as the fall of the TTF on the Dutch stock market.

Precisely because prices to be announced are expected to be reduced, the amount of government subsidy will also be lessas the government always aims to set a final price with a subsidy between 0.14 and 0.16 euros per kilowatt-hour.

However, Kostas Skrekas, Minister of the Environment and Energy, said yesterday that “when competitive tariffs fall to 0.15-0.16 euros per kWh, household subsidies will stop.” Under the consumer support mechanism that has been implemented so far, the subsidies that are announced every month after the 20th – and after the announcement of starting prices by suppliers – are “pegged” to the starting price of the dominant supplier, so that the final retail price for consumers will be set in the range from 0.15 to 0.16 euros per kWh.

That’s why when the initial price falls below these levels, the subsidy will be eliminatedsince the cost of electricity will more or less return to pre-crisis levels by itself.

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