Dhe gas market is facing new turbulences. After the throttling of Russian deliveries and the drastic increase in wholesale prices, the federal government intends to declare the alert level shortly. The Federal Ministry of Economics did not want to name a date for this.
Statements by department head Robert Habeck (Greens) in the Energy and Climate Committee that May 8th was being targeted were misunderstood. Elsewhere it was heard that the decision would come much earlier. This is what Habeck’s State Secretary Patrick Graichen indicated to representatives of the energy industry.
After the early warning stage comes the alert stage
The early warning level has been in effect since the end of March. The alert level would be the second escalation step in the three-stage crisis plan. Direct market interventions, including rationing of gas supplies, are only possible in the emergency phase. Above all, the gas alarm is a signal that prices could continue to rise across the board.
With the alert level, the federal government is creating an important prerequisite for importers and wholesalers to be able to pass on their sometimes drastically increased purchasing costs to their customers more easily. This month alone, wholesale prices have increased by around a third, more than quadrupling compared to last year.
Gas importers and wholesalers like Uniper are therefore coming under increasing pressure. In order to meet their delivery obligations, they have to procure the missing Russian quantities elsewhere at much higher costs, while the buyer side can refer to existing supply contracts and old price agreements.
When gas prices go up
However, the extended price adjustment rights do not come into force automatically. The Energy Security Act, which was only reformed in the spring as a reaction to the gas crisis, provides for a further intermediate step: after the alarm level has been declared, the Federal Network Agency must first determine a “significant reduction in the total gas import volumes to Germany”. Only then would the affected energy suppliers “along the supply chain have the right to adjust their gas prices to an appropriate level for their customers”.
The Russian gas company Gazprom has reduced its gas exports to Germany by 60 percent. Other suppliers have stepped in for this, so that total imports are currently “only” just under a fifth below the previous year’s level. It is not yet possible to predict when the price adjustment mechanism will be tightened and will also depend on the course Berlin’s politicians follow.
The further course of action is explosive in view of the already high inflation. Although rising prices would create an additional incentive to save gas, they would certainly also result in demands for further relief for consumers.
The procurement costs would also skyrocket for the municipal utilities, which supply many millions of private households, so that they would have to raise their end customer prices, said Ingbert Liebing, President of the Association of Municipal Enterprises (VKU). “We would be in very rough waters. Not only is there a risk of default by our customers, it could also lead to a wave of insolvencies in the energy industry,” he warned in an interview with the FAZ
