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Exclusive: Germany plans levy on gas bills for all consumers
Global Banking & Finance Review®
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By Markus Wacket
BERLIN (Reuters) – The German government aims to impose a levy on all gas consumers to help suppliers grappling with rapidly rising import prices, a proposal seen by Reuters showed on Friday.
The legislation is expected to be passed by parliament on July 8, according to industry sources and the government.
A spokesperson for the economy ministry declined to comment on the proposal but said the ministry was regularly checking existing instruments and whether they could be supplemented.
Germany is scrambling to put an emergency mechanism in place before July 11, when 10 days of scheduled maintenance on the Nord Stream 1 pipeline from Russia will halt flows completely.
Experts warn that outage could be extended, exacerbating gas shortages and pushing prices up even further.
The additional costs for replacing gas from Russia will be shared among all gas customers in a “transparent and non-discriminatory” procedure via Trading Hub Europe, an organisation of gas network operators.
The levy will make gas more expensive for everyone instead of the burden falling only on certain households based on who their gas supplier is.
If parliament approves the plan, the government could introduce the levy instead of a general price adjustment clause that would allow suppliers themselves to pass price increases on to customers.
Experts see the price adjustment clause as unfair and legally contestable. The clause says only reasonable costs can be passed on which allows many interpretations, energy lawyer Peter Rosin told Reuters.
Rosin said it was questionable whether contracts promising consumers fixed prices could be revoked.
The new levy assessment system will be based on the model of the EEG surcharge on electricity bills that has been used to support renewable power.
The levy proposal would still allow the federal government to trigger the general price adjustment clause if there is a “significant disruption” to gas imports.
Dwindling Russian gas supplies are forcing utilities across Europe to buy gas at high prices.
On Thursday, Germany’s Uniper said it was in talks about a possible government bailout after withdrawing its 2022 outlook due to gas supply restrictions from Russia’s Gazprom.
Industry experts estimate the gas importers need around one billion euros ($1.04 billion) per week to cover the additional costs from rising prices, an amount that the proposed levy could finance.
Germany’s Zukunft Gas lobby welcomed the proposal, saying additional costs will have to be borne jointly by all consumers.
“We are facing a financial crisis in the gas trade that urgently needs to be addressed … Without rules on price adjustments, bankruptcies threaten,” said Timm Kehler, managing director of Zukunft Gas.
($1 = 0.9610 euros)
(Reporting by Markus Wacket, Tom Kaeckenhof, Vera Eckert, Writing by Miranda Murray and Riham Alkousaa, Editing by Rachel More, Maria Sheahan and David Evans)
A gas levy is a charge imposed on consumers to help cover the costs of gas supply, particularly during times of increased import prices.
Trading Hub Europe is an organization that coordinates gas network operators in Europe, ensuring transparent and fair pricing for gas consumers.
Price adjustment clauses allow suppliers to pass on reasonable costs to consumers, but their interpretation can vary, leading to potential disputes.
The EEG surcharge is a fee added to electricity bills in Germany to support renewable energy initiatives, serving as a model for the proposed gas levy.
Gas shortages occur when the supply of gas is insufficient to meet demand, often leading to increased prices and potential supply disruptions.
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