Germany to act against energy providers exploiting subsidies

"In the first instance, I of course assume that, in the emergency that we find ourselves in, everyone will stick to the law and will only pass on to the consumer the truly necessary prices," Habeck said before leaving on a trip to Africa.

If providers tried to "test a grey zone" in the legislation, the planned abuse clause would be a clear instrument to act against them, he said.

The government plans to prevent abuse of the subsidies by banning price increases that cannot be justified by higher purchase costs up to the end of 2023.

While not all increases would automatically be illegal, increases that were unjustified would be, the Economy Ministry said in reference to the draft legislation.

The government is to subsidize energy prices up to a basic level, with consumption above that level paid for at market prices. The measure is to take effect from March next year, with retroactive effect for the first two months of the year.

On its website, the ministry put the cost of separate measures to subsidize households and companies at €295 billion ($311 billion).