Electricity prices significantly higher in 2019

What has to be considered when changing the provider?

In the New Year, electricity suppliers will increase their prices considerably. On average, the costs of numerous providers of basic services will rise by four to five percent. According to a calculation by the Verivox portal, a household with three persons and an annual consumption of 4,000 kWh will have to pay around 55 euros more per year.

The price increase was announced shortly before the end of the announcement period, six weeks before the end of the year. Verivox lists 218 suppliers who are already increasing their prices in December or January 1st. Also at Check24, 160 regional electricity suppliers have already raised their prices and announced the increase for the future.

“Experience shows that more suppliers will join in the coming weeks” says Oliver Bohr, Check24 Managing Director and responsible for Energy. Most price increases were announced in Baden-Württemberg and Hesse.

The two largest electricity suppliers in Germany, Eon and RWE subsidiary Innogy, are offering the old electricity price until the end of the year. It has not yet been decided whether this will change. “We are monitoring developments” commented an Eon spokesman. Together, the two groups have around ten million electricity and gas customers in Germany. There will be a large exchange between the two companies soon, in which Eon will take over Innogy’s customers.

Reason for the higher prices

According to the suppliers, the reason for the price increase lies in the increased purchase prices for electricity. Procurement costs have increased by more than half in the last two years. This was announced by the industry association BdEW. Another reason is the increased price for CO2 emission certificates.

Consumer protectors criticize this argumentation. “When stock exchange prices fell a few years ago, suppliers referred to their long-term contracts and did not pass the savings on to their customers” criticizes Udo Sieverding, energy expert at Verbraucherzentrale NRW. “Now they rapidly react with price increases to rising stock market prices.”

Procurement costs account for around 22 percent of the electricity price. More than half of these costs consist of allocations, taxes and levies and a further quarter of network charges. On April 1, 2018, an average electricity price of 29.88 cents per kilowatt hour was calculated for all contract types. According to the Federal Network Agency, this figure has been stable since 2016.

What to bear in mind when making a change

Only 28 per cent of households still have a contract for traditional basic provision with comparatively high prices. They are advised to change their contract. A change of supplier can save 68 euros a year per average household customer. The network agency and the cartel office advise against concluding tariffs with advance payment or deposit. Furthermore, the term of the contract should not be longer than one year. It should also be noted whether the prices could possibly be raised significantly once the fixed price has expired.