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Germany to slash power prices before 2013 elections

Source: Thomson Reuters Foundation - Mon, 28 Jan 2013 12:52 GMT
Author: Reuters
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* Green power surcharge to remain stable in 2013, 2014

* Feed-in tariffs could be delayed by some months

* German gov't hopes to implement measures by Aug. 1 (Adds details and industry comment)

By Markus Wacket

BERLIN, Jan 28 (Reuters) - Germany plans to cut electricity prices for consumers - just ahead of September's national elections - by sharing the cost of the switch to renewable energy more evenly with companies.

Environment Minister Peter Altmaier said laws would be passed by Aug. 1 this year capping increases in subsidies to renewable power producers for two years and allowing feed-in tariffs to new installations to be suspended for a few months.

"It is not acceptable that electricity consumers should keep bearing all the risk of the future costs on their own," the minister, who is from Chancellor Angela Merkel's conservative Christian Democrats (CDU), told reporters.

Altmaier's proposal would need the approval of the economy ministry, run by the conservatives' Free Democrats (FDP) allies, as well as the support of Germany's 16 federal states, many of which are run by the centre-left opposition.

The economy ministry declined to comment on Monday, saying it would wait to study the proposal.

Altmaier is a close Merkel aide who was put in charge of the environment portfolio last year to steer through a dramatic U-turn on nuclear power after Japan's Fukushima disaster. This saw Germany drop plans to keep its nuclear power stations running and commit instead to a dramatic increase in renewable power sources.

The resulting increase in the cost of electricity to German consumers and industry's concerns about the risk of shortages pose a potential threat to Merkel's bid for a third term in September's elections.

URGING ALL PARTICIPANTS

Altmaier's plan foresees an unchanged renewable power surcharge of 5.287 cents per kilowatt hour this year and next, and that any increase in following years would be capped at 2.5 percent per year, he said.

In addition, a so-called 'Energie-Soli', or energy solidarity tax, would seek contributions from owners of existing renewable installations, including wind and power, of up to 300 million euros (${esc.dollar}404 million) in total.

Germany is home to renewable energy groups such as SMA Solar , SolarWorld and Nordex, as well as top utilities E.ON, RWE and EnBW.

Feed-in tariffs - payments made to reward the generation of renewable power - could be suspended by a certain number of months for newly installed systems, saving a potential 500 million euros.

Such lavish tariffs have made Germany the world's largest solar market and a change could also help reduce new annual installations, which reached a fresh record high in 2012 and has eaten up most of the green power surcharge..

"The proposals made by minister Altmaier are urging all participants to contribute and this is a step in the right direction," said Hildegard Mueller, managing director of energy and water industry association BDEW.

Support for existing green power installations could also be reduced by 1-1.5 percent for limited period, Altmaier said.

He also said companies with high-energy consumption - usually exempted to a great extent from the renewable surcharge - would likely have to pay more for the expansion of renewables in the future. (${esc.dollar}1=0.7421 euros) (Writing by Stephen Brown and Christoph Steitz; Editing by Mike Nesbit)

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