Power subsidy cap as of 2023

Gov’t intends to curtail the support granted to electricity consumers to make it sustainable

Power subsidy cap as of 2023

The government plans to put an end to the high state subsidies in 2023 that have up to now covered between 85% and 94% of the electricity rate hikes.

As there are no resources to keep subsidizing such high energy costs for households and businesses the government will change the mix of support measures. With the coverage of up to 94% of the increases, some households reached the point of zero bills, while others also secured small refunds. 

It is impossible to continue such a policy in 2023, government sources say, as the same fiscal conditions will not exist. Inevitably, the government will have to proceed to subsidy cuts, as the budget cannot sustain such spending for such a long period of time.

Alternate Finance Minister Thodoros Skylakakis told Skai Radio on Friday that in 2023 Greece should replace gas (which has very high rates) with other fuels, save energy, and protect the most vulnerable households and businesses.

According to sources, the government seems to reject income criteria at this stage as it is an imperfect tool and socially unfair for employees and pensioners, given that tax evasion and concealment of taxable material are on the rise. However, a ceiling on electricity consumption will be considered, as it is no longer in the interest of households to use electricity for heating, given that oil is now significantly cheaper. As Skylakakis mentioned, today gas costs as if oil were at 500 euros per barrel, or gasoline at €6-7 per liter. The exorbitant rates of natural gas are passed on to electricity bills, since 30-40% of electricity is produced from gas.

Based on the above, the margins are frighteningly tight for 2023. According to initial calculations, the surplus from taxes will reach €1.5 billion next year, but this amount will have to finance other previously announced measures, such as the abolition of the solidarity levy for civil servants and pensioners, which entails some €470 million. At the same time, pensioners will get their first raise after many years. 

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