Oct. 10 (UPI) -- German energy consumers will have some relief through the winter heating season by way of a $195 billion subsidy to cover their bills, a government panel announced Monday.
A panel of experts on Monday proposed a two-stage system that would help cover the cost of energy bills. The Guardian reported the proposal offers sweeping relief for December bills. After that, large firms could pay about 7 U.S. cents per kilowatt-hour of energy for the first 70% of their bills for 16 months starting in January. Private consumers would pay 12 cents for the first 80%.
Some regional costs for October are around 15 cents per kilowatt hour.
Veronika Grimm, a member of the panel of experts advising the German government on the issue, said high prices and subsidies could become a "new normal" for German energy consumers.
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Most European economies rely heavily on Russia for energy supplies and the war in Ukraine has added a substantial geopolitical risk premium to energy bills. Europe, meanwhile, is looking to distance itself from Russia, adding to the supply-side woes.
Before the war, Germany had relied on Russia for 55% of its fossil fuels. That has dropped to 9.5% since February's invasion.
A concern, however, is that the financial relief spelled out in the German proposal won't do anything to discourage demand, which would offset some of the benefits. It's also stoking a bit of jealousy among its fellow members of the European Union, who complained they can't afford the same relief that Germany, Europe's largest economy, is proposing.
European leaders are scrambling to find ways to address the energy crisis. Collectively, they've made slow, but steady progress toward dealing with the issue through measures such as a proposal to cap the price of oil and natural gas.
That measure would be difficult to coordinate, though individual member states are taking their own initiatives to cope. Despite frustration with the proposed German subsidies, French President Emmanuel Macron announced last month that his nation will join Germany in supporting a European Union windfall tax on the "excessive" profits posted by energy companies in an effort to rein in soaring gas, coal and oil prices for consumers.
German Chancellor Olaf Scholz is expected to approve the subsidy plan quickly.
