The state is spending €75m on subsidies for energy prices, the government announced on 28 February Photo: Shutterstock

The state is spending €75m on subsidies for energy prices, the government announced on 28 February Photo: Shutterstock

Luxembourg’s government will spend €75m in direct subsidies to households as well as working with energy suppliers to reduce network costs for customers.

Parliament earlier this month had called on the government to introduce an energy subsidy in light of rising prices. The cabinet under prime minister Xavier Bettel (DP) on Monday met with providers to discuss support for households and businesses.

“It’s an exceptional situation and we temporarily need a reduction on gas and electricity bills,” said energy minister Claude Turmes (Déi Gréng) during a press conference on Monday.

Recipients of a cost of living allowance--the “allocation de vie chère”--will receive an extra €200 to €400, depending on how many people live in their household, family minister Corinne Cahen (DP) said during the same press conference.

This comes after the government previously raised the allowance by up to €400 as part of its 2022 budget.

To receive the allowance, gross household income cannot exceed €2,258.84 for a single person, with the threshold at €5,421.21 for a household including five people.

Low-income households with revenue 25% above the cost of living allowance cap will also be able to receive the energy subsidy, Cahen said. An online form and simplified administrative procedure will be set up shortly but the minister warned it could take a couple of months for money to start arriving in people’s bank accounts.

The government has also negotiated with energy providers to cancel network fees for customers. This will help make up for the high market prices, which Turmes said providers cannot influence.

Part of the €75m budget will compensate providers for abolishing their fees, which will help households save up to €500, the minister said.   

Measures for businesses are still under discussion, economy minister Franz Fayot (LSAP) said.

“Fossil energies are extortionable energies,” said Turmes, adding: “This isn’t Putin’s first gas war.” Supplies for the winter are secured, the energy minister said, but added that the conflict with Russia should give renewed impetus to the development of sustainable and renewable energy sources.

“Renewable energies are the energies that will really make us independent,” he said.

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