Germany's retail, industrial, energy sectors criticise power subsidy plan

BERLIN (Reuters) -Germany's plan to cut electricity tax for selected sectors was criticised on Wednesday, as representatives from the retail, industrial, and energy sectors warned it could distort competition and have limited impact.

Electricity prices in Germany are among the highest in the world, ranking fifth globally in the first quarter of the year with an average of 38 euro cents per kilowatt-hour.

Earlier this year, Germany's ruling coalition of conservatives and Social Democrats agreed to cut electricity tax to the European minimum for all consumers.

But the Finance Ministry framework budget for 2026 introduced on Tuesday limited the planned relief to industry, agriculture and forestry, excluding many companies and consumers, citing financial difficulties.

The dispute between the SPD-led finance ministry and the conservative CDU/CSU over the scope of the subsidies is one of the first since the two parties officially took office last month.

"With such a breach of the coalition agreement, the government is squandering the trust of the trade and tearing the rug out from under companies," Alexander von Preen, head of HDE trade association, said.

Sepp Mueller, the deputy leader of the conservative CDU/CSU parliamentary group, said reducing electricity costs for everyone remained the party's goal.

"We now need to quickly discuss when we can implement this," Mueller told Reuters.

Germany's Chamber of Industry and Commerce (DIHK) said the cuts were a slap in the face for many companies as the government had sold the scheme as an immediate measure.

"No one understands why, despite the planned record debt, this already quite small but very important relief should not be possible," DIHK President Peter Adrian said.

On Wednesday, Economy Minister Katherina Reiche said Germany will present a concrete concept for an industrial electricity price after the European Union introduced a new state aid framework that would allow such subsidies.

Germany's utilities lobby BDEW also warned of market distortions and a slowdown in the expansion of renewable energy.

BDI industry association said the narrow scope and numerous restrictions of the measure leave too little room to lower electricity prices to an internationally competitive level.

The ZDH Central Association of Skilled Crafts said an industrial electricity price would distort competition to the detriment of small and medium-sized craft businesses, which must co-finance this relief.

(Reporting by Riham Alkousaa, Christian Kraemer and Holger Hansen, editing by Ed Osmond)