High energy prices: when will gas customers get help?

Dhe gas price traded on the stock exchange has fallen significantly and has thus reached its lowest level since June. However, consumers can hardly expect any quick relief as a result. Market prices are still four to five times higher than two years ago. After all, the trading price for gas at the Dutch node (TTF) fell on Monday by 13 percent to 100 euros per megawatt hour in the meantime – after a record high of 342 euros in August. The energy economist Lion Hirth from the Berlin private university Hertie School cites the mild weather as the reason for this: Tankers with liquefied natural gas (LNG) have to be unloaded, but many gas storage tanks are full.

Hirt points out that for the next year the gas price on the exchange will still be around 150 euros per megawatt hour. “Should the current price level stabilize for 2023, this would correspond to a gas tariff for households of well over 20 cents per kilowatt hour,” he told the FAZ. That is still around four times more than before the crisis. The planned gas price brake is intended to cushion the price increase extensively in the coming year: from March 2023 to the end of April 2024, the state is to subsidize gas consumption and reduce the gross price for households and small and medium-sized companies to 12 cents per kilowatt hour for 80 percent of the September payment. For large-scale industry, the procurement price should drop to 7 cents.

Already from January 1st?

So far, the gas price brake is only planned for the end of the heating period, which should give suppliers enough lead time. But now the federal government is pushing for grants for gas customers to be brought forward. Chancellor Olaf Scholz (SPD) brought January 1st as a date for this. Federal Finance Minister Christian Lindner (FDP) was also open to this. Both said that this would depend on the suppliers, who would have to change the billing earlier. The prime ministers had previously called for the gas price brake to be brought forward. On Monday, a government spokesman said that many utilities had said they would not be able to do it anytime soon: “The desire to install a gas price brake that will take effect very quickly is a bit counter to reality.” There are some utilities that allow for earlier billing could. This must be checked. But there can only be one introduction for all customers.

Representatives of the energy companies consider an earlier changeover to be impossible. As an alternative, they bring another one-time payment into play, similar to the already planned waiver of the December down payment for gas customers. The Commission for Gas and Heat, which advised the government on this, proposed this aid at the end of the year in the amount of the September deduction as a bridging measure until the gas price brake.

Gas supplier: That can’t be done

The Federal Association of Energy and Water Industries (BDEW) announced that bringing forward the gas price brake will not fail because of the energy industry’s lack of will, but because of the impossibility of the technical and administrative implementation in such a short period of time. “The necessary conversion of the IT processes is so complex that the broad front of energy suppliers cannot cope with it in such a short period of time,” said association president Marie-Luise Wolf. That is why the one-off payment for December was developed: “This can also be paid out again in January in order to bridge the period up to March 1, 2023.” Wolf heads the municipal energy supplier Entega in Darmstadt and, like the economist Hirth, was a member of the gas commission.

Ingbert Liebing, General Manager of the Association of Municipal Enterprises (VKU), sees it the same way. “If politicians want additional relief in January and February, then it would be better to repeat the December solution,” he said. Because the much more complex, second stage of the gas price brake from March to January is not going to be implemented that quickly from a technical point of view. Billing procedures and technology would have to be changed.

Trading price for natural gas already increased in 2021

The Stadtwerke representative looks similarly at the planned electricity price brake, which should work in the same way as the gas price brake. Federal Economics Minister Robert Habeck (Greens) has announced relief for January. However, Liebing said about the electricity price brake: “If it is to take effect in January, this can only be done with simple solutions such as waiving the December discount.”

The trading price for natural gas has already risen in the past year and has also increased further with the uncertainties caused by the Russian war of aggression in Ukraine. For consumers, however, the price increases will only have a noticeable impact this year. According to BDEW, a household with an annual consumption of 20,000 kilowatt hours paid an average of around 15 cents per kilowatt hour in August, twice as much as in previous years. Two-thirds of this is accounted for by procurement and sales costs and the remainder by government taxes, which accounted for around half in previous years. According to the comparison portal Check24, consumers currently pay an average of 18.6 cents per kilowatt hour.

Strong fluctuations and increases in exchange prices do not have a direct impact on the end customer price because the suppliers purchase the required gas in partial quantities and at different times. This is intended to minimize the risk of fluctuating stock exchange prices, which is why the increase in energy prices only reaches end users with a time delay. The same applies to a drop in stock market prices. According to BDEW, the gas price in wholesale has increased twelvefold since the beginning of 2021, but the gas price component ‘procurement’ has only tripled slightly in this period.