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EXPLAINED: What we know about Austria’s planned electricity price cap

The Austrian government on Sunday said they have agreed on an electricity price cap to halt rising energy prices. Here's what we know so far.

EXPLAINED: What we know about Austria's planned electricity price cap
Photo: Pixabay.

As energy prices soar in Austria, the government had already said it would work on instituting a price brake, as The Local reported.

Now, the first details of such a plan are emerging as Chancellor Karl Nehammer confirmed to Austrian media that the coalition has agreed on the general guidelines for a price cap.

“The electricity price cap is coming. We want to adopt it as early as Wednesday in the Council of Ministers so that we can get into implementation quickly”, Nehammer said.

READ ALSO: Where are energy prices going up (again) in Austria?

Energy Ministry Leonore Gewessler confirmed: “We are still working on final details, but nothing stands in the way of a decision by the Council of Ministers”.

After the council’s approval, the measure will be sent to parliament, where final approval is expected “as soon as possible” and “probably in October”, the report said.

What is the price cap?

Initial details leaked from government circles point to a price cap for the first 80 percent of the average consumption of a household. This measure would limit the impact of the rising costs while still providing incentives to save electricity.

READ ALSO: Vienna forced to dim street lighting and cancel some Christmas illuminations

The limit is to be 2,900 kilowatt hours (kWh), according to the government plans. Up to this level, only ten cents per kilowatt hour are to be charged – only for consumption above this level is the market price to be paid.

How much are households going to save?

The electricity price brake is expected to relieve a household annually by an average of around €500 per year, according to government calculations.

The regulation will apply equally to every household – with no distinction between, for example, a home with just one person or a family of five. Whilst not distinguishing between households might make is seem less fair it allows the regulation to be put into place quicker.

The opposition, however, has intensively criticised the measure. “That was the worst possible variant that the ÖVP and the Greens could have come up with. Support is not going where it is most urgently needed.”, the NEOS party said.

READ ALSO: UPDATED: Why did Wien Energie ask for €6 billion from the Austrian government?

In the second stage, people exempt from the GIS fee (lower-income households) will receive additional assistance. A total of €2.5 billion is earmarked for the measures.

Measures to cushion high inflation

Austria is seeing high inflation rates, with prices soaring to a 50-year high.

In particular, high energy prices bring more uncertainty to residents of the alpine country.

The federal government has taken some measures announced as part of relief packages with one-off payments and changes in the tax system.

READ ALSO: Reader question: I recently moved to Austria, will I receive the ‘climate bonus’?

One of the main payouts is the “anti-inflation” payment to be paid together with a “climate bonus” sum to all adults in Austria, totalling €500 already this month.

Still, as consumer prices are expected to continue rising in the coming months, the government stated it is “already working intensively on the possibility of further mitigating measures”.

READ ALSO: Energy crisis: What to do in case of a power outage in Austria

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Russia suspends gas to Italy after ‘problem’ in Austria

Russia's Gazprom has suspended gas deliveries to Italy's Eni, blaming a transport problem in Austria, the Italian energy giant said on Saturday.

Russia suspends gas to Italy after 'problem' in Austria

“Gazprom told us that it was not able to confirm the delivery of the volumes demanded for today, citing the impossibility of gas transport through Austria,” Eni said in a statement.

As a result, “Russian gas flows to Eni via the Tarvisio entry point will be naught”, it said.

In a statement published on Telegram, Gazprom said the problem was due to regulatory changes in Austria that took place at the end of September and that it was working with Italian customers to resolve the issue.

According to Gazprom, the Austrian gas grid operator had refused to confirm the transport nominations.

In Austria, regulatory authority E-Control said the new rules, which entered into force on Saturday, had been “known to all market actors for months”.

It said it expected “all to conform and take the necessary measures to fulfil their obligations”.

The problems were related to “contractual details” linked to the transit of gas towards Italy, it said on Twitter, adding in response to a tweeted question that this currently had “no effect” on users in Austria.

Most of Russian gas delivered to Italy passes via Ukraine through the Trans Austria Gas Pipeline (TAG), to Tarvisio in northern Italy on the border with Austria.

Before the war in Ukraine, Italy imported 95 percent of the gas it consumes — about 45 percent of which came from Russia.

Outgoing Prime Minister Mario Draghi has signed new deals with other gas producers to reduce Italy’s reliance on Russia, lowered to 25 percent as of June, while accelerating a shift towards renewable energies.