Merkel to Review Industry Exemption for German Power Tax

German Chancellor Angela Merkel will review an exemption that companies receive offsetting power taxes after consumers were told to pay a record fee for subsidizing renewables such as solar and wind.

More industries were granted a waiver for the clean energy surcharge underwriting renewable energy, saddling consumers with a bigger increase, Merkel said in a speech to the BDA employers’ association. The exemptions account for half a euro cent of the increase, Merkel said.

“We must review also this part because they’re now more than just those facing international competition,” Merkel said in the speech today in Berlin.

Merkel’s government is seeking to prevent a voter backlash against rising energy costs before the next general election in the autumn of 2013. Consumers in Europe’s biggest economy face an extra 59 euros ($77) added to average power bills next year because the fee for renewables will climb 47 percent to 5.28 euro cents a kilowatt-hour, the country’s grid operators said yesterday.

The government needs to “urgently correct” the country’s clean-energy subsidy system as companies face “an explosion” of energy costs because of Merkel’s support for renewables, Dieter Hundt, head of the BDA lobby, said at the same conference.

‘Increasingly Important’

“For many companies, the cost of electricity today is an increasingly important factor as they do business, and it definitely works against Germany,” Hundt said.

While it’s “urgently necessary” to reform the subsidy system, implementing any sweeping changes will be difficult “when a sufficient number of people profit” from it, Merkel said. Money paid to owners of solar panels for 20 years by the state is “among the safest” investments, she said.

Environment Minister Peter Altmaier last week set out plans to reform the system by capping subsidies for wind, biomass and solar power that have surged since 2004 when the government guaranteed above-market prices for electricity generated from clean sources.

The clean-energy industry and politicians from the opposition Social Democratic Party and Green Party have called on the government to cut exemptions for those companies that don’t compete internationally instead of limiting support for renewables.

Merkel’s government last year lowered the minimum consumption of companies that can apply for the waiver from 10 gigawatts to 1 gigawatts. The measure was right as it protects 850,000 jobs at energy-intensive companies, Economy Minister Philipp Roesler said yesterday in Berlin.

To contact the reporters on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net; Tony Czuczka in Berlin at aczuczka@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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