Gas Price Reduction: Munich's City Utilities to Lower Rates

Mon 7th Aug, 2023

The City Utilities Munich (SWM) have decided to slash gas prices by nearly half, effective from October 1. This announcement, previously made in May by the municipal energy provider, is now being definitively implemented. Gas costs are expected to decrease by around 40 percent at the beginning of the heating season, according to an SWM spokesperson. This reduction will apply to both private and commercial consumers without fixed-price contracts. Moreover, electricity prices are also set to drop by 20 percent starting November 1.

These price reductions will have a noticeable impact on customers, especially when the state-mandated price controls for electricity and gas expire at the end of the year. Following the City Utilities' decision to cut prices, the new rates will immediately factor into the calculation of advance payments. Customers who have already received their annual bills in recent weeks or months will need to adjust their advance payments online or contact customer service to discuss future payments, as advised by the City Utilities.

For a household consuming 20,000 kilowatt-hours per year at the basic rate, the SWM has exemplified the difference. Without the state-mandated price controls set to expire by the end of 2023, the advance payment would have been 362.10 euros. Now, it will be 199.10 euros. However, the City Utilities note that the 163-euro difference cannot be universally applied to all consumers as it's just a guideline.

The basic tariff's gas unit price will decrease from 21.09 cents to 11.31 cents per kilowatt-hour, going below the state-set price ceiling of twelve cents. This reduction amounts to 44.6 percent. A glance at comparison platforms for gas suppliers indicates that with this move, the City Utilities will catch up with competitors after a period of higher prices, though they still remain toward the lower end of the supplier spectrum. The most affordable providers offer gas starting from approximately 8.5 cents, with variable basic costs.

Over the years, the SWM has been known as a reliable provider offering sensible rates. Until January 1, 2022, the basic rate's kilowatt-hour cost was 5.6 cents. It increased to 7.18 cents at the start of 2022. Subsequently, due to the Ukraine conflict, gas costs surged for customers in several increments, reaching the current peak of 21.09 cents. The SWM acknowledged their mistakes, attributing them to short-term purchasing compared to other major providers, which led to 15 years of relatively lower prices.

The household with a consumption of 20,000 kilowatt-hours would have had to pay 4,345.22 euros annually with current gas prices. Following the reduction in October, this sum will decrease to 2,389.22 euros. However, the state-mandated energy price control has been retroactively applied to gas since January 1, 2023. For 80 percent of the previous year's consumption, there's a cap of 12 cents. Thus, SWM customers are among the key beneficiaries of this government aid.

Nevertheless, providers, including the City Utilities Munich, find it challenging to calculate the impacts of the energy price controls and keep customers updated. This is partly due to ongoing adjustments in the law and the complex implementation process. Therefore, the City Utilities advise customers to be proactive in seeking clarity by contacting advisory services. They assure customers that solutions will be found, especially for those dealing with accumulated arrears due to delayed advance payments or annual bills.

Write a comment ...
Post comment