Electricity Costs Put Pressure on Welfare Recipients

The basic social security benefit in Germany, known as the "normal requirement" ("Regelbedarf"), often does not suffice to pay for electricity costs. The gap between normal requirement and average electricity expenses ranges between five and eleven euros per month, depending on household composition. Decentralised electricity-powered water heating widens the gap even further, by an additional nine to 19 euros per month. This is the finding of a current study conducted by the Mannheim Centre for European Economic Research (ZEW) in cooperation with the German Caritas Association.

The costs for rent and heating are directly borne by social welfare offices as part of the basic security. Electricity expenses, by contrast, must be covered by the households themselves out of regular benefits given to them. The monthly benefit is determined by household structure (single person, couple, family) and the children's age. Since January 2015, a single person at the age of 18 to 64 receives a monthly benefit of 399 euros. This amount is supposed to cover subsistence, including the demand for electricity.

The ZEW researchers calculated the average electricity demand of German welfare recipients by analysing data from more than 22,000 households. This data was gathered from January 2014 to May 2015 in the course of the "Power Saving Check" project ("Stromspar-Check"), a joint project of the German federal association of energy and climate protection agencies and the German Caritas Association). A representative single-person household consumes 1,605 kWh per year, which equals annual costs of 521 euros and monthly costs of 43 euros.

Consumption is significantly higher if hot water is provided by electricity-powered heating. For the same household, the figure would increase by 813 kWh per year. Despite additional benefits for water heating, only one out of three households using electricity-powered water heating, regardless of the type of household, is able to cover the costs through "normal requirement" benefits. Infants (normal requirement level 6) are in particular affected by this underfunding.

The analysis is the first to directly observe the consumption of welfare recipients. It complements the former calculation of standard rates, which is based on the sample survey of income and expenditure ("Einkommens- und Verbrauchsstichprobe" EVS). The results suggest adjusting the per-capita requirement for electricity. More attention should be paid to increased demands due to electrical water heating.

For more information please contact

Dr. Peter Heindl, Phone +49(0)621/1235-206, E-mail heindl@zew.de

Dr. Daniel Römer, Phone +49(0)621/1235-214, E-mail roemer@zew.de