In order to secure the heat and energy supply in the coming period of cold weather, the Federal cabinet today adopted in a written procedure a temporary gas security surcharge based on section 26 of the Energy Security of Supply Act. The aim is to prevent insolvencies and disruptions to supply amid the energy crisis caused by the Russian attack on Ukraine, and thus to maintain the security of supply for households and industry. The temporary surcharge will be supported by additional targeted relief for households and the extension of assistance programmes for industry.
The Federal Government’s statutory instrument will be presented to the Bundestag for consultation. This will be followed by its publication in the Federal Gazette. The statutory instrument is expected to enter into force in mid-August and take effect from 1 October 2022. It will end on 1 April 2024. In line with the statutory requirements of the Energy Security of Supply Act, the validity of the statutory ordinance will expire on 30 September 2024.
Vice Chancellor and Federal Minister for Economic Affairs and Climate Action Robert Habeck said, “With its attack on Ukraine, Russia has also created a severe energy crisis and an artificial shortage of energy, and has driven prices up. This external shock is affecting our country, which has been heavily dependent on low-cost gas from Russia in particular for many years. We are doing everything we can to become more energy independent and are making good progress. But we have to adjust to the fact that gas has become a scarce and expensive commodity.”
Habeck emphasised this point, “The temporary surcharge is a consequence of the crisis caused by Russia. It is no easy step, but it is necessary in order to secure the heat and energy supply in households and in industry. The costs will thereby be shared in solidarity, as far as this is possible: The gas importers affected will bear the entirety of the costs for substitute gas until the beginning of October. Afterwards, they will be spread across many shoulders. 10% of the costs will be carried by the gas importers affected for the period the surcharge is in force.”
The Minister made it clear, “The Federal Government’s decision in favour of the temporary surcharge will be, and has to be, accompanied by further relief for our citizens. As a first step, we have agreed on additional targeted relief to help precisely those who have little. In my view, further relief measures are urgently necessary. Russia’s attack in violation of international law has produced a crisis that needs a strong social response.”
Habeck continued, “Some companies are also under pressure as a result of the high prices. We will extend assistance programmes accordingly and thus provide help through the crisis. This is about safeguarding jobs and maintaining supply chains.”
Details on the statutory instrument:
The statutory instrument on the introduction of a gas security surcharge is based on section 26 of the Energy Security of Supply Act. The overarching goal is to maintain market mechanisms and supply chains for as long as possible, in order to prevent insolvencies on the part of gas traders and domino effects in the energy industry’s supply chain.
The background is as follows: Due to reductions in supplies on Russia’s part, previously contractually guaranteed gas supplies have been discontinued. Therefore, the gas importers affected can only meet their obligations towards energy suppliers (such as municipal utilities) with new purchases. But they increasingly lack the funds to purchase gas from other sources because, due to contractual arrangements, they are unable to pass the higher prices on to their customers at this point in time. This creates substantial losses. If these losses are too high, gas importers pertinent to Germany’s gas supply are in danger of collapsing, which can in turn lead to disruptions in supply and further insolvencies. This would endanger the supply of gas to private and commercial users.
The Federal Government is therefore intervening in the market. The gas importers affected will continue to bear the entirety of the much higher costs for substitute gas until the beginning of October. With the adopted statutory instrument, from 1 October they will be able to receive financial compensation for a large part of the costs incurred from purchasing gas from other sources, but only for a limited period. Gas importers can apply for compensation through the market area manager, Trading Hub Europe. They can claim 90% of their actual additional procurement costs, but only for existing contracts. An auditor, or other inspectors specified in the statutory instrument, will have to test the validity of their claim. The Federal Network Agency will supervise the process as an independent authority.
To fund the compensation, the costs can be distributed across many shoulders through the netted price adjustment, i.e. a kind of surcharge. This will also prevent a portion of gas customers – namely those being indirectly supplied by gas importers with high costs incurred from purchasing gas from other suppliers – from having to bear unsustainable price increases and distortions of competition occurring in the industry.
Market area manager Trading Hub Europe will calculate the exact amount of the temporary surcharge. It will be disclosed on 15 August. The statutory instrument will set the exact method for calculation. On 1 October, Trading Hub Europe will levy the temporary surcharge on the balance responsible parties, who in turn – depending on the structure of the contractual conditions – can then pass it on to their private and commercial customers. The surcharge will be invoiced monthly and can be adjusted every three months.
So that energy suppliers may disclose possible price increases in a legally certain and transparent manner, the statutory instrument is to enter into force on 9 August. Specific issues that cannot be conclusively clarified in the course of interministerial coordination and the consultation of Parliament will be further examined independent to the entry into force of the statutory instrument.
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