Price adjustment to stabilise the gas market

Gas surcharge as of 1 October 2022 Price adjustment to stabilise the gas market

Russia is supplying significantly less gas to Germany. Importers are having to procure alternative supplies of natural gas at considerable expense and need support in order to continue to secure the supply. The Federal Government plans to provide financial compensation through the introduction of a surcharge.

The photo shows a gas cooker

It is not yet possible to specify exactly how much gas consumers will have to pay for the general surcharge, as it will depend on how many financial compensation claims are made and how high they are. 

Foto: picture alliance/dpa

Russia's war against Ukraine is continuing to cause turmoil in the energy markets. Russia is weaponising energy and cannot be relied on as a supplier. Russian suppliers have repeatedly cut gas imports to Germany since mid-June. Gas importers are having to look for alternative supplies and compensate for the supply shortfalls at a considerable cost, and they are often unable to pass on the additional costs to their customers due to contractual provisions. This results in considerable losses for the respective companies, which they will only be able to absorb for a limited period. This situation threatens the collapse of companies that are key to the functioning of the gas market and supply security.

Energy Security Act allows for gas surcharge

This is why we need a way to offset the high procurement costs incurred by importers. The Energy Security Act provides for the imposition of a net price adjustment, which involves distributing the additional costs incurred through the procurement of alternative gas supplies among consumers by means of a surcharge. The Federal Government has now passed the relevant Gas Price Adjustment Ordinance. All gas consumers will be subject to the surcharge from 1 October 2022, and it will end on 1 April 2024. The surcharge will be invoiced up to 30 September 2024: it will be charged on a monthly basis and is subject to adjustment every three months.

Robert Habeck (Federal Minister for Economic Affairs and Climate Action): "The temporary surcharge is a result of the crisis caused by Russia. While it is not an easy step to take, it is necessary in order to secure the heat and energy supply both for domestic consumption and for the economy. The costs will be distributed as fairly as possible: until October, the gas importers affected will bear all the costs for procuring alternative supplies on their own. After that, the costs will be shared evenly among many stakeholders. For as long as the surcharge remains in force, the respective gas importers will bear 10 percent of the costs themselves.”

Surcharge amount still unclear

It is not yet possible to specify how much the surcharge will be, as it will depend on how many financial compensation claims are made and how high they are. The decisive factor will be what happens with Russian gas supplies. However, a surcharge of between 1.5 and 5 cents per kilowatt hour can be assumed for all gas consumers in Germany. The surcharge amount is currently being calculated and will be published on the Trading Hub Europe website in mid-August.

Relief for households

The surcharge will impose a considerable financial burden and households will be faced with additional costs of several hundred euros. The Federal Government is unanimous in its desire to introduce further relief measures for consumers, and Federal Chancellor Olaf Scholz has emphasised that the Federal Government will do everything in its power to support those who are particularly hard hit.

Stabilising the gas market

The Federal Government is well aware that a gas surcharge is an additional financial burden. However, this measure is necessary to secure the long-term gas supply. It is vital that gas importers continue to retain flexibility so as to prevent any worsening of the already tense gas market situation. Another reason for the decision is that a general surcharge will help keep the price increase for many consumers lower than it would be were cost increases to be passed on directly.

Reduction of gas imports by Russia
Under the Energy Security Act, a net price adjustment is permissible if a significant reduction in gas import volumes to Germany is imminent or has been determined by the Federal Network Agency. Ever since Russia began its war of aggression against Ukraine in violation of international law, there have been repeated reductions in gas import volumes. The supply was cut to 20 percent as of 27 July 2022. Russia is using natural gas as a means of exerting political pressure. The manipulative tactics of the Russian Federation means there is a high risk of supplies being cut even further.