Experts Warn: Electricity Price Cap Could Backfire

The federal government wants to cap the electricity price at 10 cents (excluding network costs and taxes) during times of crisis. The economically liberal research institute EcoAustria is not in favor of this. The associated short-term relief could "lead to serious economic, energy-related, and legal problems," according to a brief analysis by the institute. The "Presse" had previously reported on this.

EcoAustria Critically Views Electricity Price Cap

Suppliers would no longer be able to differentiate themselves through different prices if a cap were in place, creating massive economic pressure for providers without their own production. "The result would be an energy market with too little competition among providers," said Monika Köppl-Turyna, director of EcoAustria, in a statement. There would also be fewer incentives to save energy. Energy suppliers could respond with preemptive price increases, which could even lead to higher end customer prices.

EU Legal Question Marks

From EcoAustria's perspective, a price cap would only be effective with export restrictions, but these would be questionable under EU law. If such a price cap were extended for political reasons, even though the market would not demand it, it would delay necessary structural reforms and conceal rising costs.

EcoAustria instead recommends direct payments to low-income households. A "Social Tariff Plus" could specifically target families with low purchasing power. Even a brake on electricity costs would be "less harmful than a general price cap." It would bring similar problems as the price cap but would be less distorting.

(APA/Red)

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