Cheap electricity law: an empty promise for millions of households?

Cheap electricity law: an empty promise for millions of households?

The Austrian federal government recently presented the new electricity industry law, which is called the “Cheap Electricity Act”. This law aims to reduce energy costs in Austria. However, according to the Secretary General of Austria Energy, Barbara Schmidt, there is a lot of skepticism regarding the naming and the expectations associated with it. Despite a high share of 94% renewable energy in the country's electricity mix, electricity affordability remains only average. Price advantages are only in prospect for social assistance recipients with a special tariff, while essentially no reductions are planned for the rest of the population, only a dampening of future cost increases. The draft is encountering resistance from renewable energy associations and the opposition because it requires a two-thirds majority for adoption.

Another problem is the forecast increase in network fees, even though electricity costs were reduced after the crisis. From January 1, 2025, all crisis mechanisms will expire, which will lead to higher costs for all consumers. Although Schmidt recognizes positive elements in the draft law that support the transformation process, the big picture remains questionable.

Criticism from Burgenland

Prominent politicians from Burgenland also criticize the draft electricity market law. State Governor Hans Peter Doskozil and his deputy Anja Haider-Wallner express concerns about the upcoming price increases that are expected as a result of the new law. The social tariff only affects around 250,000 households, which means that only a small part of the population can benefit from the planned measures. This highlights that electricity bills remain opaque and incomprehensible, and support for energy communities is lacking.

In addition, the so-called Austrian surcharge for domestic, clean energy production is perceived as burdensome. Doskozil calls for a transparent explanation from the federal government about how the electricity price should be reduced in 2026, especially after the electricity price brake ends on January 1, 2025. Although the energy suppliers' profits are collected by the federal government, these are not used to reduce energy prices.

Challenges for the energy transition

In Burgenland, municipal energy suppliers offer a price of 10 cents per kilowatt hour for domestic, renewable electricity generation. However, with around 140 electricity suppliers and over 3,800 energy communities in Austria, it is essential to support the establishment and operation of these communities. The draft law reduces incentives for network investments, which could ultimately endanger network security.

Loud Statistics Austria A detailed analysis shows that energy balances cover a wide variety of energy consumption types, from industry to services. These balance sheets are based on extensive surveys and company statistics. Final data will be published at both Austrian and federal state levels.

Overall, the question remains whether the new law will actually lead to a noticeable reduction in energy prices or whether it will ultimately turn out to be an empty promise. The challenges are enormous, and many political and economic actors are skeptical about the future development of energy costs in Austria.