Germany slaps levy on households to help wean country from Russian gas
Costs soared in Europe after Moscow cut flows of natural gas through the key Nord Stream pipeline. File picture: Stefan Sauer/dpa/AP
Germany’s government has said households will face additional annual costs of about €290 to pay for natural gas as the burden of Russia’s squeeze on energy flows to Europe is redistributed.
From October, consumers will have to pay an additional levy for natural gas, Trading Hub Europe said.
The blow of the temporary levy will be softened by subsidies for some households.
“The levy is a consequence of Putin’s illegal war of aggression against Ukraine and the artificial energy shortage caused by Russia,” economy minister Robert Habeck told reporters in Berlin.
The levy comes as Europe shifts its focus to curbing consumption in the face of a worsening energy crisis.
On Monday, the prices of European wholesale gas continued to trade at close to record levels amid fears that even worse could come should the Kremlin decide to further turn down or cut altogether its gas supplies to the EU as part of the economic war over Ukraine.
The price of gas for delivery in October traded on the Dutch market early evening at over €215 per megawatt per hour, while the contract for delivery in December was trading at a slightly higher price.
Irish wholesale gas prices are strongly influenced by the price of continental European gas. German power prices have climbed to a record amid mounting concerns that the EU may struggle to generate enough electricity this winter.
That has pushed inflation rates and threatened Germany’s industry.
Mr Habeck said the levy, which runs until the start of April in 2024, would cost an average single household about €97 a year, a couple would pay about €194 more and a four-person household would have extra costs of about €290.
Utilities will be able to pass along costs for offsetting missing Russian supplies from the start of the fourth quarter. Germany had been trying to avoid making consumers pay for higher energy costs following Russia’s invasion of Ukraine.
However, officials fear Moscow could cut off gas flows completely, forcing them to act. The mechanism is set to accelerate inflation in Germany, analysts at Commerzbank Research said in a report on Monday.
The bank estimates the inflation rate should rise well above 9% by year’s end. Consumer prices in the continent’s biggest economy jumped 8.5% from a year ago in July.
The levy follows a regulation that came into force on August 9 to help energy utilities that have been forced to buy more expensive gas in the spot market.
Their costs have soared after Moscow cut flows through the key Nord Stream 1 pipeline to Europe.
Uniper, Germany’s largest Russian gas buyer, is counting on the levy to help it to shore up its finances, after the company signed a bailout from the government.
Energy companies have been asking the government to raise prices for consumers to avoid a domino effect in the sector.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
