Shock and awe for 1.4 million households relying on natural gas

Shock and awe for 1.4 million households relying on natural gas

The government is mulling new solutions for the energy crisis as the winter is projected to be more severe than previous ones for some 1.4 million homes that have chosen gas as their heating source, despite soaring prices. 

According to Hellenic Statistical Authority (ELSTAT) figures from August, the price of natural gas increased by 261.3% compared to the same month last year, while heating oil increased by 65% and electricity by 38.5%.

Under these circumstances, new measures to assist people and businesses are expected to be revealed in due course, with the new combination of policies likely to go into effect in October.

In particular, the government is mulling the reduction of subsidies (which have reached 94% of the increases), while at the same time giving a premium to households that save electricity. The reduction of the subsidy from October could potentially lead to subsidies for 1.4 million households using gas. 

However, the government’s big problem is not so much for the last two or three months of the year, but for 2023, given that it is extremely difficult for the budget to support consumers at the same levels as in 2022.

According to reports, the government intends to increase the amount of the heating allowance from 168 million euros to more than 200 million euros, as well as broaden the recipients. At the same time, incentives for returning to heating oil and limiting the use of electricity (through air conditioners, heaters and so on) for household heating are expected to be introduced.

As far as electricity is concerned, the horizontal subsidies seem to be over. Various support schemes are being considered, all of which are consumption-related. 

This could include a lower subsidy than at present for all households and businesses based on consumption, namely a fixed rate which will increase in line with the reduction in consumption.

Another scenario could be a subsidy on electricity bills, linked to the amount of electricity consumption. That is, for lower consumption the subsidy will be higher and as consumption increases the subsidy will decrease.

The Stability Program has not earmarked any budget for household support in the coming year. In fact, households will be subsidized from the excess tax revenues, estimated at 1.5 billion euros, but this amount seems to be sufficient only for the first two or three months of the year.

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