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ENERGY

UPDATED: Why some households in Vienna are set for a gas price hike

Wien Energie is reportedly planning to double the price of heating for hundreds of thousands of residents in Austria's capital city.

A person changing the heating setting on a radiator. The coalition has pledged financial support people in Germany.
Wien Energie is reportedly planning to double district heating prices. Photo: picture alliance/dpa/dpa-Zentralbild | Fernando Gutierrez-Juarez

Around 440,000 households in Vienna who have district heating will find their bills are to rise by 92 percent, or almost double, according to information from the Kronen Zeitung newspaper.

Wien Energie also confirmed the information to broadcaster ORF on Tuesday evening and is set to submit an application about the price increase to the City of Vienna in the coming days.

For the average household, the increase means additional expenditure of around €45 per month, or €540 per year.

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Vienna’s Mayor Michael Ludwig (SPÖ), told the Kurier on Wednesday the price hike is “not set in stone”, but that he has limited powers to stop it as the measure is a “necessity resulting from the operational management of Wien Energie”.

Additionally, even though Ludwig has the final say on the price increase, he can only refuse the proposal if it greatly exceeds international price developments.

Part of the reason for the proposed increase is that two-thirds of district heating is generated from gas, which Austria largely imports from Russia. 

According to the Kronen Zeitung, Wien Energie argues the price increase is due to the global energy crisis and the fact that the Austrian gas price index last month rose by more than 470 percent compared to May 2021.

The report also says Wien Energie “needs the money to achieve the goal of climate neutrality and to be able to phase out gas”, with planned investments of €1 billion earmarked for the transformation.

READ MORE: What is Austria planning to do to cushion the rising cost of living

Executive City Councillor Peter Hanke (SPÖ) said: “We are in talks with Wien Energie. More details will follow soon.”

In the past 25 years, there have only been four increases in the price of district heating in Vienna.

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Why (and when) double-digit inflation is set to hit Austria

Financial experts in Austria do not expect inflation to slow down any time soon. In fact, they are predicting the opposite. Here's what you need to know.

Why (and when) double-digit inflation is set to hit Austria

In a recent interview, inflation expert Josef Baumgartner forecast that inflation in Austria will hit double-digits in the coming months.

Baumgartner, from the Austrian Institute of Economic Research (WIFO), told Kurier that residents in Austria should prepare themselves for an ongoing increase in inflation due to rising energy prices.

Baumgartner said: “We’re a long way from the all-clear. According to the announcements by Wien Energie and EVN, I expect an inflation rate of more than ten percent by September, and no later than April 2023.”

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The latest estimate by Statistics Austria shows inflation was already at 9.2 percent in July, as reported by The Local.

This is in stark contrast to predictions made by the European Central Bank earlier this year when it was expected that inflation would fall in the second half of 2022.

How expensive could energy in Austria become?

WIFO expert Baumgartner based his forecast for Austria on wholesale electricity prices, which are currently 247 percent higher than in August 2021, reports ORF

Baumgartner said: “If the energy suppliers pass this on one-to-one, there is a risk of an enormous price increase.”

Additionally, Baumgartner expects prices for electricity and gas to go up by a further 50 percent in September, and was not optimistic that the planned nationwide electricity price cap will be enough to dampen energy prices.

READ MORE: Cost of living: How to save money on energy bills in Austria

He added that federal government intervention must go further to tackle gas and district heating prices.

On August 3rd, EVN and Wien Energie – both part of the Energieallianz Austria (EAA) group – announced they will be increasing energy prices from September.

EVN (which is mostly state-owned) blamed the move on price increases on the international wholesale markets.

According to ORF, Baumgartner believes these planned price increases will further impact the customer price index and push up inflation across Austria, even if the tariff changes only apply to customers in the east of the country.

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