Now comes the gas surcharge: what that means for you

  • the Gas Price Adjustment Ordinance is on the way
  • the Systemic relevance of the energy procurers: Fear of the Lehman Brothers effect
  • How high should it gas surcharge stand out?
  • the regional energy suppliers are also turning the price screw
  • What are the critics saying?

Almost half of the 40.6 million apartments in Germany use natural gas as an energy source. In Bavaria, the proportion of gas users is slightly lower at 35 percent. The residents face a difficult autumn. In addition to the announced gas surcharge, the price increases of the regional gas suppliers are now fluttering into the house. Not opening the unpleasant letters is not a good idea.

The Gas Price Adjustment Ordinance is on its way

The Federal Ministry of Economics and Climate Protection (BMWK) has the departmental coordination to implement a levy § 26 Energy Security Act (EnSiG) initiated. In August, the Federal Cabinet intends to pass the “Gas Price Adjustment Ordinance – GaspreisanpassV”. It is scheduled to come into force on October 1st and expire on September 30th, 2024. In essence, it is about the introduction of a Gas price levy for all customers, no matter what contract they have. Since the surcharge will not take effect until October 1st, 2022, the gas importers will have to bear the accumulated deficits themselves until then.

Why is this necessary? Gas importers like Uniper, VNG, RWE and Wingas have got into economic turbulence because the contractually promised gas from Russia is no longer reaching the storage facilities. Gazprom initially reduced the amount via the Nord Stream 1 pipeline to around 40 percent. After the completion of regular maintenance work in July, the low level of 40 percent was there for a few days before it rose 20 percent reductionwithout there being a technical reason for this.

In order to be able to fulfill their contractual obligations to customers (usually the public utilities), the wholesalers have to buy the missing Russian natural gas on the world market. They have to pay significantly more for this than for the comparably cheap gas from Russia. In addition, the difficult supply situation is increasingly reflected in higher gas prices. The ridiculous price at the Leipzig Energy Exchange EEX is relevant for all buyers who have not secured enough gas through long-term supply contracts, but now have to buy additional gas on a daily basis. The corresponding prices have increased more than tenfold since the beginning of 2021. Gas on the European Gas Spot Index currently costs around 215 euros (as of July 28, 2022) per megawatt hour (MWh). The surcharge is intended to bail out the gas importers. They are to be reimbursed for 90 percent of the additional costs they incur because they have to procure missing Russian gas on the world market. This huge syringe is supposed to save her from bankruptcy.

The systemic relevance of energy procurers: Fear of the Lehman Brothers effect

There is a reason that the state is relieving gas importers of the high additional costs and that is Lehman Brothers. The US investment bank Lehman Brothers had sunk into losses due to unsecured loans. The bankruptcy on September 15, 2008 grew into a global banking and financial crisis due to the global networking of the financial markets. Financial institutions made billions in losses, many were saved with billions in taxes.

Economics Minister Robert Habeck sees the Russian energy policy as a risk of an energy crisis that could have as wide an impact as the collapse of Lehman Brothers. “As utilities accumulate losses from being forced to cover high-priced volumes, there is a risk of spillover effects (aAlso called propagation effects, where one state affects another state) for local utilities and their customers, including consumers and businesses,” Habeck said. “If this minus becomes so great that they can no longer cope with it, the whole market threatens to collapse at some point,” he said at a press conference called at short notice in Berlin. “So a Lehman effect in the energy system.”

Habeck meant the following chain: At some point, gas wholesalers such as Uniper, VNG or Wingas will no longer supply the public utilities, nor will the public utilities supply downstream customers, and then you can imagine what will happen in Germany. Gerhard Schick, financial expert of the Greenshas calculated what the Lehman crisis cost the Germans: 59 billion euros. And since not all aid has expired, the total amount could increase to up to 68 billion euros. For him, this is a devastating record. A family of four then put more than 3,000 euros in bankrupt banks.

How high should the gas surcharge be?

And how high should the contribution be this time? The text of the regulation is silent on this. There it only says: “The amount of the levy depends on the number and amount of the financial compensation claims asserted. The amount of the levy should be published on the homepage of by mid/end of August 2022 THE (Trading Hub Europe) to be published.”

Economics Minister Robert Habeck put it at 1.5 to 5 cents per kilowatt hour (kWh) last week. That’s a huge range. Check24 has from this information model calculations created that you for all variants (e.g. for a single household or as a married couple) can watch. Here is the model calculation for a family with 2 children who live on 180 square meters and consume 20,000 kWh of gas per year. In the future, the gas levy will be reflected in the following:

  • at 1.5 cents per kWh: 357 Euro gas levy per year
  • at 2.0 cents per kWh: 476 Euro gas levy per year
  • at 2.5 cents per kWh: 595 Euro gas levy per year
  • at 3.0 cents per kWh: 714 Euro gas levy per year
  • at 3.5 cents per kWh: 833 Euro gas levy per year
  • at 4.0 cents per kWh: 952 Euro gas levy per year
  • at 4.5 cents per kWh: 1,071 Euro gas levy per year
  • at 5.0 cents per kWh: 1,190 Euro gas levy per year

The regional energy suppliers are also turning the price screw

Not only does the state-imposed gas levy apply, but also the price increase of your regional provider. Gas Price Watcher at Check24 and Verivox have their hands full keeping their gas price database up to date. The consumer portals can hardly keep up with entering the price increases announced by gas suppliers in their tables. Check24 registered 540 price increases in March alone. The prices for heating have risen the most – by 145 percent. In July 2021, the model household still had to spend an average of 1,332 euros per year for gas and heating oil, currently it is already 3,266 euros.

RheinEnergie, one of the largest regional suppliers, now shows how the gas suppliers calculate in concrete terms. He calculated and shocked his customers with the result. In addition to the planned state gas surcharge should they Prices for natural gas will rise from 7.87 cents per kilowatt hour (kWh) to 18.30 cents on October 1, 2022. And this is how the energy company calculates for its customers:

  • In a Cologne apartment with an annual consumption of 10,000 kilowatt hours, the annual costs increase to around 2,002 euros (previously: around 960 euros), which is an increase of around 108 percent.
  • In a large apartment or a smaller detached house with an annual requirement of 15,000 kilowatt hours, the new annual costs are around 2,918 euros (previously: around 1,353 euros), which is almost 116 percent more.
  • District heating: While the average district heating price in 2021 was around 407 euros per year in an average apartment in Cologne, it will now rise to around 705 euros/year in 2022, with the expected price adjustment on October 1, 2022 already being included here. This corresponds to an increase of around 73 percent.

The reason given by the company: “The reason for this is an almost 450 percent increase in the procurement costs for natural gas compared to the procurement period 2021/22 to 2022/23. Despite a system of long-term continuous procurement, this leads to significantly increasing prices”.

What are the critics saying?

Ulrich Schneider, General Manager of the Joint Association, does not like the idea of ​​a gas levy at all: “It is unacceptable that crisis winners are now also exempt from any purchasing risk,” said Schneider Editorial Network Germany (RND). Schneider calls for an “excess profit tax for companies that have generated and continue to generate exceptionally high income through war and crises”.

DGB boss Yasmin Fahimi also told the RND that the unions are pushing for relief for all private households in order to cushion the costs of the gas surcharge. “We want a price guarantee for the basic needs of private households, which is based on the average consumption over the past year,” said Fahimi. For any consumption that goes beyond that, the market price would have to be paid. This would create a stronger incentive to save instead of just creating frustration. Fahimi defended the allocation. “It is correct not only to pass on the additional costs caused by the crisis to individual gas customers,” she said.

The President of the German Institute for Economic Research (DIW), Marcel Fratzscher, also considers the gas surcharge to be “right and necessary”, he explained the Rheinische Post. So that companies and citizens in particular would make urgently needed savings wherever possible. At the same time, however, he calls for a third relief package for people with middle and low incomes. Otherwise she would “Passing on lead to social catastrophe.”

Conclusion

The price increases announced by energy suppliers in the regions and the gas surcharge are a huge shock for gas end customers. With a little good will, cold showers and two or three degrees less room temperature in winter, it is probably not enough. It’s going to be an expensive fall and winter. It is certainly correct that the federal government is choosing the path of collective gas surcharges instead of passing on prices individually between the suppliers involved and their customers. However, it remains unclear why it is not taking on the task of rescuing gas importers from tax revenue, as it did during the banking crisis.

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