Denmark’s energy bill payouts delayed until end of summer

Emergency payouts by the Danish government to families hard-hit by high energy prices will not arrive in accounts until August this year at the earliest.

Denmark’s energy bill payouts delayed until end of summer
Danish energy minister Dan Jørgensen said he regrets political procedure holding up payouts of one-off cash benefits for households impacted by high energy prices. Photo: Philip Davali/Ritzau Scanpix

Parliament in February agreed on a deal for so-called ‘acute’ one-off cash payments to families struggling to pay heating bills amid a major bump in energy prices.

The one-off sum of 3,750 kroner will be given to around 320,000 households in Denmark after a majority in parliament agreed on the measure in February.

But the money, intended to help cash flow during the winter when heating is most expensive, will not be paid out until the end of the summer. That follows earlier reports that a political deal agreed in February to provide for the payouts would not be passed by parliament until May.

The payments will now go through in August and September at the earliest.

“When we made the agreement I was convinced that we could get the money out faster than it has turned out to be possible,” climate, energy and critical supplies minister Dan Jørgensen said to news wire Ritzau.

“I’d like to apologise for that. Because there are many people out there with a legitimate expectation to receive the money,” he said.

“But there are many things that must be resolved in relation to, for example, data management, so it can’t be done faster,” he said.

Jørgensen has meanwhile summoned the other political parties to fresh talks on possibly broadening the financial assistance. The Socialist People’s party, an ally of the government, this weekend signalled it wanted to spend more on the measure.

“Since we reached the agreement on a targeted one-off heating bill payout, the situation has got significantly worse. There’s a war in Europe and energy prices are still very, very high,” he said.

“We must therefore look at (increasing the financial response). We will have negotiations about this,” he said.

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Denmark to reduce electricity tax in 2022 and 2023

A majority in the Danish parliament has agreed to reduce the amount of tax charged on electricity, beginning this year.

Denmark to reduce electricity tax in 2022 and 2023

The deal was presented on Friday in the form of a political agreement between enough parties to vote it through parliament.

The reduced electricity tax, which will be temporary, is expected to cost the Danish state 475 million kroner and is part of a wider deal which aims to compensate the public for increasing living costs.

Tax on electricity will be eased by 4 øre per kilowatt hour for the last three months of 2022 (1 øre is one hundredth of a krone), and by 4.3 øre per kilowatt hour in 2023.

As such, the electricity tax rate will be 72.3 øre per kilowatt hour for the last quarter of 2022, and 68.8 øre per kilowatt hour throughout 2023.

Electricity taxes were already scheduled for reduction under the terms of a 2018 political agreement.

Prior to Friday’s agreement, the plan was for electricity tax to fall from 76.3 øre per kilowatt hour in 2022 to 63.9 øre per kilowatt hour in 2025.

The temporary cuts announced on Friday are separate from that deal and mean that the tax will be lower than planned in 2023, but will rise at the beginning of 2024.

Friday’s agreement also includes provisions to increase tax subsidies for people in employment and to give a one-off lump sum of 5,000 kroner to elderly people who receive the ældrecheck welfare benefit.

The overall cost to the state of the deal is 3.1 billion kroner.

Parties from both sides of the political aisle have pledged to back the agreement in parliament. They include the Socialist People’s Party (SF), the Red Green Alliance, Social Liberals (Radikale Venstre), Conservative and Liberal parties along with the Social Democratic government.

The increasing cost of energy is cited in the agreement as the primary reason for the necessity of the deal.

The Danish Chamber of Commerce praised the political agreement in comments to news wire Ritzau.

“A reduced electricity tax means both consumers and businesses get an incentive to switch to green electricity,” the interest organisation’s director Brian Mikkelsen said.