Reduction of the Electricity Tax Has Been Decided

In the calendar year 2026, it will be reduced from the current 1.5 cents per kilowatt hour (kWh) to 0.82 cents. For private households, a rate of 0.1 cents per kWh is planned. The measure will expire at the end of 2026. The proposal, introduced by SPÖ, ÖVP, and NEOS, was also supported by the Greens. Criticism came from the Freedom Party, which refused to give its approval.

The measure is a building block to reduce inflation, said Chancellor Christian Stocker (ÖVP) in the plenary. After all, the high electricity price hinders economic growth, weakens competitiveness, and is one of the main drivers of inflation. Even if the relief is small, "it is still the right step," the Chancellor defended against criticism. He emphasized that the government is implementing a package of measures in this area - in addition to reducing the electricity tax, he mentioned the recently passed "Cheap Electricity Act" and the industrial electricity bonus. He accused the FPÖ of wanting to continue importing gas from Russia and thus remain dependent on Moscow.

Babler: Government Takes Concerns Seriously

The government shows that it delivers and takes people's concerns seriously, said Vice Chancellor Andreas Babler (SPÖ). The reduction of the electricity tax is a "quickly effective step." SPÖ finance spokesman Kai Jan Krainer also did not want to "downplay" the reduction of 50 euros per year or five percent. Incidentally, the Freedom Party also demanded a reduction in the electricity tax last week, said NEOS club chairman Yannick Shetty: "It's a shame that you are against it, Mr. Kickl."

NEOS leader and Foreign Minister Beate Meinl-Reisinger distanced herself from the previous black-green government. They thought they could solve everything with tax money and subsidies, she criticized, especially towards the Greens. In contrast, the black-red-pink coalition is implementing structural measures such as the "Cheaper Electricity Act" and ensuring counter-financing.

Kickl Speaks of "Deceptive Package"

FPÖ club chairman Herbert Kickl saw the extent of the reduction in the electricity tax as a "deceptive package" presented by the "loser traffic light" in this "pre-Christmas special session." Stocker acts as a "political Santa Claus." Kickl attributes this "miraculous transformation" of Stocker to the poll numbers, which are "in free fall" for the governing parties. The population is being "deceived," as it was the week before when the government presented the so-called "Cheap Electricity Act." And today's "relief" must be "searched for with a magnifying glass," as it is "a placebo and not a breakthrough." "The loser traffic light gifts the average household with a whopping four euros per month, and the whole thing is limited to one year, because in January of the next year it will dissolve into thin air," criticized Kickl. And for the government to be so "generous," it taps into the dividends of the Verbund, with the "aftertaste" that the "red and black energy companies in the states, which have made massive profits," now receive another package under the Christmas tree.

Green Party member Jakob Schwarz supported the measure of the governing parties: "This measure today actually lowers prices. This is good news for people and also for businesses." The electricity prices are too high, which is a problem for households, for industry, and also for climate protection. Last week, the government misused the so-called "Cheap Electricity Act" as a "smoke grenade."

Government Pushes for End of Merit-Order Principle

In the lead-up to the special session, the government announced a letter to the EU Commission demanding an end to the merit-order principle in the electricity market. Fossil fuels still determine the market price, criticized Stocker. Therefore, Austrians cannot sufficiently benefit from the cheaper renewable energy produced domestically, Meinl-Reisinger complained.

In the letter to Brussels, they want to "draw attention to the special circumstances and challenges of the common electricity market and also present concrete proposals," explained Stocker. Meanwhile, Babler described the merit-order principle as an "insane principle." Since they cannot rely solely on the speed of the EU, they are now implementing national measures. According to Meinl-Reisinger, they will also advocate for a "solidarity compensation" for network costs with the EU Commission. Austria, as a transit country for electricity, is disproportionately affected by rising network expansion costs.

In the merit-order principle, the electricity price is always determined by the plant necessary to meet the electricity demand. This has led to the expensive electricity produced from gas power plants driving up the entire electricity price during the energy crisis in recent years. The merit-order principle has also been questioned at the European level in this context - but ultimately retained.

Economy Wants Further Measures

The entire project of reducing the electricity tax is expected to cost around half a billion euros. The money is to come from state-affiliated companies, specifically 200 million euros from Verbund, 200 million euros from the Federal Real Estate Company (BIG), and 100 million euros from a balance sheet profit from dividend income of the state holding ÖBAG that has not yet been distributed to the federal government. However, the 200 million euros that are supposed to come from BIG would further increase the already high budget deficit, which is why, according to the ORF news program "Zeit im Bild," other companies, which are only partially state-owned, are to be asked for money instead of BIG. The Ministry of Finance promises a budget-neutral solution.

Company representatives praise the planned reduction of the electricity tax but simultaneously called for further steps. The Chamber of Commerce (WKÖ) advocates for an extension of the electricity price compensation until 2030. Currently, this measure, which benefits particularly energy-intensive companies, is limited until the end of 2026. The Federation of Austrian Industries (IV) echoes this sentiment. "In light of the tense budgetary situation, more focused measures would be preferable," IV Secretary General Christoph Neumayer is quoted in a statement. Austria's electricity industry welcomes the rapid reduction of electricity costs but criticizes the "rigid temporal expiration date" at the end of 2026. Electricity could again drive inflation at the beginning of 2027 when the measure expires.

(APA/Red)

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