Merz renews electricity-tax pledge, but €5.4 billion is still missing

That is the question Chancellor Friedrich Merz has put back on the negotiating table—and the one his renewed commitment does not yet answer. The federal budget draft emerging from parliamentary committee negotiations contains none of the approximately €5.4 billion needed to extend the promised relief to households and businesses outside the existing scheme. After roughly 16 hours of final adjustments, the budget committee finished early on Friday, November 13, without financing the reduction.⁠1

Speaking in Dublin that day, Merz publicly maintained his goal of lowering electricity tax to the European minimum, in full, from next year. He expected the coalition committee to discuss it again the following Tuesday. His official statement makes the distinction plain: the budget negotiations had concluded without the cut; he still wanted it delivered. This is a renewed commitment, not an agreement or an enacted tax reduction.⁠16

The promise already appears in the coalition agreement. The difficulty now is not finding another formulation of it, but agreeing which other priorities should give way. And the disagreement runs within Merz’s conservative CDU/CSU bloc as well as between the conservatives and their Social Democratic coalition partner.⁠1⁠31

The SPD’s financing condition leaves little room for ambiguity. Its parliamentary budget spokesman, Thorsten Rudolph, says further savings could still make the cut possible, but rules out paying for it through new borrowing. Finance Minister and SPD co-leader Lars Klingbeil also requires credible offsetting financing. He says he will examine proposals and may bring suggestions of his own; he has not announced an agreed package.⁠1

Klingbeil’s reference to roughly €5 billion that negotiators had failed to find is a rounded description of the funding requirement, not evidence that the approximately €5.4 billion cost has fallen. He also puts the unresolved gap in the 2028 budget at €25 billion and says further tax cuts must not enlarge it. Another €3.8 billion remains in an earlier budget reserve for preparing that budget, but it has not been assigned to electricity-tax relief.⁠1

On November 12, SPD parliamentary leader Matthias Miersch had described the reduction as not financeable so far and doubted that the week’s negotiations would resolve it. Friday’s willingness to reopen discussions creates another opportunity; it does not establish that his financing objection has been overcome. Klingbeil, meanwhile, points to lower electricity-network charges, abolition of the gas-storage levy and a temporary fuel discount as measures already being used to restrain energy costs.⁠1

One proposed trade-off would sacrifice another coalition promise. CDU budget politician Mathias Middelberg has suggested foregoing the planned expansion of the Mütterrente, the pension credit associated with raising children, to make room for electricity relief. The expansion is a CSU priority as well as a coalition commitment.⁠1

Klaus Holetschek, who leads the CSU parliamentary group in Bavaria, rejects that exchange. He argues against playing one fairness issue against another and says the pension improvement concerns nine million mothers and is already anchored in law. That beneficiary figure is his account, not a separately verified count. Bavaria’s social affairs minister, Ulrike Scharf, has also opposed Middelberg’s suggestion.⁠31⁠30

Middelberg also points to state support programmes, saying their volume has grown from approximately €8 billion eight years ago to €60 billion. That is his argument for finding savings—not an agreed inventory of expendable spending. Other ideas discussed within the Union include using surpluses in the renewable-energy support account and cutting programmes in the Climate and Transformation Fund. None has become an agreed financing decision.⁠1

For consumers, the stakes are more concrete than the billions exchanged in the political argument. Section 3 of Germany’s Electricity Tax Act sets the standard rate at €20.50 per megawatt-hour, equivalent to 2.05 cents per kilowatt-hour. An October 13 model from comparison service Verivox assumes a household reduction to 0.1 cents, the European non-business minimum. That would remove 1.95 cents of electricity tax per kilowatt-hour.⁠48⁠44

Including the associated reduction in 19% VAT, the modeled gross saving is about 2.32 cents per kilowatt-hour. The following annual examples assume the reduction is enacted, suppliers pass on the entire benefit and other price components do not change. They are not amounts households can deduct from their bills now.⁠44⁠48

Those examples work out to approximately €2.90, €5.41 and €7.73 a month respectively. The October model begins with an average gross household price of 34.36 cents per kilowatt-hour, including the basic charge, and produces a price of about 32.04 cents after the change—a reduction conventionally rounded to 7%. That percentage describes the October calculation, not a forecast for every contract next year. Electricity itself, network costs and other bill components would still have to be paid.⁠44

Verivox estimates aggregate household relief at approximately €3 billion annually, using household consumption of 132.2 terawatt-hours in 2024. That is a different measure from the broader €5.4 billion financing requirement, which also covers businesses outside existing relief. Nor is this targeted hardship assistance: a fixed saving per kilowatt-hour gives larger users more euros, regardless of income.⁠44⁠1

The existing business scheme is narrower than a blanket industrial tax cut. Section 9b provides an application-based refund for qualifying manufacturing, agricultural and forestry business use. Sector and use determine eligibility; high consumption alone does not qualify a household or every small business.⁠49

The refund is €20 per megawatt-hour against the €20.50 standard tax, but only the annual refund amount above €250 is paid. Eligible additional consumption therefore faces a 0.05-cent-per-kilowatt-hour rate at the margin; it is misleading to apply that rate to every eligible firm’s entire consumption. The law excludes electricity used for electromobility and sets conditions for storage, losses and energy supplied onward. Households remain dependent on a separate political decision.⁠49

For Merz, the unfunded promise has become a test of delivery inside his own bloc. Tagesspiegel, citing Bild’s account of a Wednesday evening meeting, reported that more than 30 Union lawmakers spoke critically during discussions lasting roughly three hours. Middelberg publicly acknowledged the confrontation. North Rhine-Westphalia CDU general secretary Paul Zimiak warned that the party was losing all credibility. These are signs of internal pressure, not evidence of a parliamentary majority for any particular savings package.⁠1

North Rhine-Westphalia premier Hendrik Wüst is among the conservative leaders pressing for relief. His state, with approximately 18 million residents, votes on April 25, 2027, giving the demand an immediate electoral setting in Germany’s most populous state.⁠1

The expected next negotiating date is Tuesday, November 17, in Berlin. Cash’s November 13 account gives “Tuesday, November 18,” but November 18 falls on Wednesday; Merz’s own wording, “next Tuesday,” supports November 17, as does Tagesspiegel’s Tuesday account. No meeting hour is established.⁠4⁠16⁠1

Committee completion is not final parliamentary adoption. Union budget spokesman Christian Haase sees a theoretical route to further amendments through special meetings before final budget completion on November 27. That leaves a political opening, not a promised outcome.⁠31⁠1

The useful test on Tuesday is therefore whether the coalition agrees to specific offsets and a route to the necessary budget and legislative decisions—not whether its leaders repeat that they favour lower bills. Until those decisions are made, Merz’s public commitment leaves households paying the existing standard electricity tax.⁠16⁠48