Government Announces Major Energy Reform in Two Decades

On June 9, 2025, the Austrian government revealed a significant agreement regarding initial steps towards a comprehensive energy reform. The new Electricity Industry Act (ELWG) is set to initiate what is being described as the largest energy reform in the last twenty years. According to the Chancellor's office, this legislative change aims to create a fairer energy market, reduce bureaucratic hurdles, and lower electricity costs.

This reform package includes the introduction of a social tariff intended to support those at risk of poverty. The government has assured that energy providers will be legally obligated to pass on reductions in wholesale prices to consumers, thereby aiming to lower grid costs. Additionally, households and businesses will be given more opportunities to produce, share, or trade electricity directly.

In tandem with these changes, a legal framework for an 'Energy Crisis Mechanism' is being developed. This mechanism will serve to prevent drastic price hikes during emergency situations. Chancellor Christian Stocker emphasized the need for a fundamental reform of the Austrian energy sector, stating plans to modernize the energy market to make prices more affordable for both private citizens and businesses.

Vice Chancellor Andreas Babler highlighted the prolonged burden of rising housing and energy costs on the Austrian populace. He noted that the government's recent measures, including a rent freeze, were initial steps to combat inflation, which has impacted approximately 2.7 million tenants nationwide. Babler stressed that the next phase involves a major reform of the electricity market to alleviate financial pressures on the entire economy.

Foreign Minister Beate Meinl-Reisinger remarked that this first reform step, undertaken in cooperation with local and regional authorities, is expected to inject new vitality into Austria's economic and labor sectors.

For context, energy prices rose by 1.3 percent in May. The inflation rate for the same month was projected at 3.0 percent, a slight decrease from April's 3.1 percent. The primary contributors to inflation have been service costs, which saw an annual increase of 4.4 percent. The rise in energy prices was somewhat mitigated by significantly lower fuel costs, which offset the impact of rising electricity expenses.