List Forum für Wirtschafts- und Finanzpolitik

In Germany, power prices for private households have virtually doubled since the outset of the new millennium. Millions of poor households and those that are close to the poverty threshold are likely to suffer from these increases in electricity costs. This article investigates the resulting burden for a few types of low-income households, such as that of a poor single pensioner. Besides sketching the development of past cost shares in household income, we provide scenarios about future energy cost shares of these household types. In 2013, our estimates on the basis of stylized facts suggest that our single-pensioner household had to pay nearly as much for covering the electricity demand as for heating purposes. Given the continuing strong increase in the share of costly renewable technologies in electricity consumption, it is to be expected that electricity cost shares will increase in the upcoming years. This raises the urgent question of how to mitigate the regressive impact of further increasing electricity prices on poor households and those that are endangered by poverty.