Will gas flow through the Nord Stream 1 pipeline again soon, won't it? If not, the bottleneck in Russian gas supplies will lead to further bottlenecks. And that's in the money. The suppliers will feel this first, but then, with a time lag, the consumers will too. How bad will it get?
How are the higher purchasing costs for gas imports already being felt?
After being relatively stable at a high level until mid-June after the first shock of the war, gas prices have risen enormously since mid-June. The background is the Russian delivery cuts through the Nord Stream 1 pipeline - allegedly due to technical problems with a turbine. Due to the annual maintenance of the pipeline, which has been running since Monday, and the uncertainties as to how things will continue after the scheduled completion of the work at the end of next week, the price on the futures market has recently shot up again - last week by a day in the meantime eight percent to 175 euros per megawatt hour.
Due to the Russian supply cuts, many gas traders have to buy gas that is around 60 percent more expensive on the futures market in order to continue to serve their customers with the promised quantities. That costs money: the energy company Uniper alone expects additional costs in gas procurement of up to 10 billion euros by the end of the year if prices remain at a similar level.
What do consumers think of this?
Many gas customers have hardly seen any of the developments on the gas market on their bills. "The massive increase in procurement costs only becomes noticeable in private households when their usually one-year collective bargaining agreement ends - or when you move and therefore have to sign a new contract," confirms Lion Hirth, energy economist at the Hertie School and founder of the consulting firm "Neon New Energy Economics". Uniper CEO Klaus-Dieter Maubach also warned that the massive price increases on the futures markets will certainly also affect end customers - albeit with a certain delay: "German consumers are facing a very, very large price wave." , said Maubach at a press conference.
What do the changes in the Energy Safety Act mean for consumers now?
In order to relieve gas importers such as Uniper, the Energy Security Act, which was amended at short notice last week, is intended to provide a "toolbox" with various options. Consumers could feel two of them directly: Either the federal government can allow suppliers to pass on the increased purchasing costs along the supply chain to their customers at short notice (paragraph 24) - i.e. from the importers concerned to intermediaries such as municipal utilities and then on to the end customers.
As an alternative option, the additional costs can be passed on to all gas consumers in Germany in the future (paragraph 26). The former was also possible under most gas contracts – albeit with a delay. The second option is practically a solidarity contribution from all gas customers. However, the two mechanisms for passing on prices have not yet been activated. For this, the Federal Network Agency would first have to determine a significant gas shortage due to permanently insufficient gas imports. That could be the case at the earliest if no more gas were to flow from Russia to Germany after the regular maintenance break for Nord Stream 1.
How much can suppliers adjust prices?
According to the Energy Security Act, suppliers are allowed to raise prices to a "reasonable level". However, consumer advocates are already criticizing the fact that there is no cap for this. "Private households would then not be protected from extremely high gas prices," fears Thomas Engelke, an energy expert at the Federal Association of Consumer Organizations. This could also affect customers who have a price guarantee in their gas contract. So far, however, the federal government has primarily focused on supporting the energy companies so that the price increases do not have to be implemented in the first place.
How high could the gas levy be?
This cannot be precisely quantified and depends largely on the development of delivery volumes from Russia and the prices on the futures markets. On Friday, Uniper boss Maubach, whose company, as the country's largest gas importer, also has to replace the largest gas volumes from Russia, named at least one order of magnitude: If the additional costs for alternative procurement on the futures markets are passed on to all gas consumers, according to Maubach, 25 euros per megawatt hour could be achieved attack. However, the calculation basis for this number are the gas prices from two weeks ago, he added – in the meantime, prices on the futures market have continued to rise. If, on the other hand, the federal government were to go directly to Uniper with a billion-dollar contribution and take over substantial shares, this could reduce the liquidity requirement and the amount of a levy a bit. In other words: the more taxpayer money flows, the less the gas consumers should be burdened for the time being.
What price increases are threatened for gas customers in the medium term?
The impact of the turbulence on the gas market on consumers depends to a large extent on political developments over the next few months – primarily on the Kremlin's decisions on Gazprom's future gas supplies to Western Europe. There are already initial estimates of the burden, but many of these vary. For example, consumer advocates expect additional costs of 1,000 to 2,000 euros for an annual consumption of 20,000 kilowatt hours of natural gas. Energy economist Hirth also expects a significant increase for consumers: "Up until now, an apartment in an old building or an unrenovated single-family house with a gas boiler had heating costs of around 100 euros per month. With the current market prices, the costs are likely to rise to 300 to 400 euros."
This article first appeared on Capital.de.
