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How much extra will households in Germany pay under new gas surcharge?

With a new gas levy set to come info force in October, experts have been looking at how much more people will have to pay - even if they've already agreed contracts. There are also calls for everyone, including non-gas customers, to contribute.

Money lies on a radiator.
Money lies on a radiator. People with gas heating will face much higher costs due to a new levy. Photo: picture alliance/dpa | Patrick Pleul

What’s happening?

As The Local has been reporting, the German government has put together a draft law which will see a ‘Gasumlage‘ – or levy – brought in to prop up struggling suppliers by allowing them to pass on nearly all the extra costs of soaring gas import prices to consumers. 

According to the initial draft, the levy is expected to apply from October 1st 2022 until April 1st 2024. It’s not clear if costs will reach consumers immediately, but bills will rise significantly as a result of the levy. 

READ ALSO: What is Germany’s new gas ‘tax’ and who will pay more?

Who is affected?

Everyone who uses gas to heat their home or business is affected by the new levy. The charge applies even when customers have already signed contracts where a fixed monthly payment is agreed. About half of all homes in Germany use gas for heating and/or hot water.

Wait – so ordinary people now have to pay for the gas supply problems?

Basically – yes. As Russia has been cutting down supplies, the German government says the levy is needed to share the additional costs for replacing the gas.

Under the Energy Security Act, 90 percent of the additional purchase costs of securing gas will be passed on to all gas consumers from October.

If, for instance, Uniper – the largest gas trader in the country – no longer gets enough gas and therefore has to buy on a daily basis and pays three times as much for this resource, then all gas gas consumers in Germany will bear 90 percent of this cost.

READ ALSO: Why households in Germany will soon face gas bill hikes

What cost increases will these gas customers face?

The ‘tax’ will make gas prices more expensive, although, we won’t know the exact amount of the levy until the middle or end of August.

However, we do have an idea of how much the rising costs will be. Energy and Climate Minister Robert Habeck said last week that the levy could be anywhere in the range of 1.5 to 5 cents per kilowatt hour.

For many consumers, this will be an enormous challenge.

A person changing the heating setting on a radiator. The coalition has pledged financial support people in Germany.

Heating prices are going up. Photo: picture alliance/dpa/dpa-Zentralbild | Fernando Gutierrez-Juarez

According to calculations by the internet portal Check24, a one-person household with an annual consumption of about 5,000 kilowatt hours would have to pay between €89 and €298 a year for the levy alone, while a family with a consumption of 20,000 kilowatt hours would have to reckon with additional costs of €357 to €1,190.

Many consumers who have a price guarantee in their contracts may think they won’t have to pay the levy – but they are wrong, warns Udo Sieverding, energy expert at the North Rhine-Westphalia Consumer Advice Centre.

That’s because this guarantee does not protect against state surcharges or levies. “Everyone has to pay,” says the consumer advocate, regardless of their contract or deal with a supplier. 

READ ALSO: ‘Difficult winters ahead’: Germany sets out emergency energy saving measures

Is it unfair to make gas consumers – and not all households – pay the levy?

The price hike only affects gas customers in Germany. So people whose heating or hot water comes from different sources – such as heat pumps or electricity – will not have to pay it. 

However, gas customers have already been dealing with extremely high prices on new contracts recently. Since July last year, prices for a family household have risen from €1,300 to €3,415 a year. 

Including a levy of five cents per kilowatt hour, a household would have to pay an average of €4,605 – 254 percent more than in July 2021.

Sieverding, of the Consumer Advice Centre, thinks this isn’t fair – and Germany should look at introducing tax increases instead of just making gas consumers pay.

“It’s about solidarity for society as a whole, and tax increases would make more sense than a levy,” he said. He also fears that more and more fan heaters will be plugged into the sockets in winter, putting a strain on the electricity grid.

READ ALSO: Should I invest in an electric heater in Germany this winter?

Why do only gas customers have to pay?

According to German media, gas is the scarcest commodity among the energy sources, and the practical implementation of passing the costs onto gas consumers is much easier than putting in place a general tax on everyone.

Plus: a levy that affects everyone is a serious intervention that has to be proportionate and legally secure.

Isn’t Germany meant to be taking the heat off ordinary people?

Yes. The German government has been trying to cushion the blows of rocketing energy prices and subsequent rising inflation. It has taken measures such as introducing the €9 ticket and a fuel tax cut for three months, giving out a Kinderbonus to children in July and is set to give a taxable €300 payout to people in employment from September – and even got rid of the EEG levy on electricity earlier than planned.

So it seems strange that it is actually bringing in a new levy. However, it reflects the dire situation that Germany is in. Having relied on cheaper Russian gas imports for decades, now the country is having to scramble around to find other sources – and ordinary households are paying the price of political decisions and Russian President Vladimir Putin’s actions. 

READ ALSO:

What are businesses saying?

As you can imagine, they are concerned too. The Federation of German Industries has argued for a price cap, or an opportunity to pay in staggered amounts.

“Otherwise, the gas levy threatens to massively undermine the competitiveness of companies,” the association said. 

The German Energy Industry Association, however, welcomes the levy as a measure to pass on replacement costs quickly and “to preserve the liquidity of the energy supply companies”.

The association also highlighted that the charges “are levied equally on all consumers and without privileging certain customer groups”. This allows for a transparent calculation of the levy and a fair distribution of the burden, they said.

Member comments

  1. I am at a loss. Is this pure incompetence or corruption, or both?

    Im so angry that big companies are bailed out and can impose this levy on customers all whilst their profits soar. Dividends are being raised and have been given out throughout this year. But they need protection while average Jo is given a 300€ taxable payment to which is paid for by taxes you’ve already paid and the promise of help somepoint in 2023. Its about time this government actually governed rather than pandering to whoever is lining their pockets.

    Open nord stream 2, keep the nuclear plants open. Drop this green agenda rubbish. We need power and gas now, not in 5 or 10 years time. And as for what ever Mr Vouge thinks or says who cares. He’s not incharge of German foreign policy. (As much as I am a critic of German policies. We are here now going like we are now is going to be disastrous, so much so we haven’t seen anything yet.)

  2. I find it difficult to believe “ordinary”, grown people don’t accept that higher gas prices will obviously hit them as they are the consumers. If a business has to pay more for something, of course the customer bears the brunt. Businesses are not charities.

  3. I dont have a reply button but my comment box has a notify me if anyone answers my comment?

    Lyssa77 . I normally follow your train of thought there, businesses are not charities but I draw the line at energy, water and housing. These 3 should never be run for profit. The companies that run these sectors usually have a monopoly. Which under the right circumstances can be dangerous. ( Berlin housing problem). In terms of energy right now we are in a very precarious place. The government refuses to open nord stream 2, this would flood Germany with all the gas it needs and return prices to lower levels. So the price hikes are nothing to do with normal market conditions but they are however government policy.

    Sholz then proceeds with this whole walking together bull. Then allows 90% (confirmed by Uniper the government intends this to be 90% it was used as part of their consideration for the profit stabilisation scheme) of costs to be passed on thus making energy bills cost as much as rent does. All the while companies like RWE are adjusting their profit forecast for 2022 from 3.6 to 5.5 billion in profits. Uniper are bailed out with taxpayers money less than 2 months after paying out over 25 million euros in dividends and they too are raising costs. RhienEnergie is doubling its prices before placing the levy on top. They posted 1,12 billion in profit.
    While profits soar and tax payers money flows to the tune of up to 14 billion euros is it morally acceptable for the consumers to bear the brunt of a levy As well? I am not sure i like Sholz’s idea of together.
    People need gas to live. We don’t have a choice but to pay these prices. Theres a difference between running a business and openly price gauging. To me with the evidence I see before me. Its price gauging and its government sanctioned.

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ENERGY

Gas crunch pushes German glassmaker to the brink

In 400 years, Heinz-Glas, one of the world's biggest producers of glass perfume bottles, has seen off many crises - including World Wars and the oil shock of the 1970s in the last century alone. But Germany's current energy emergency strikes at the heart of its very existence.

Gas crunch pushes German glassmaker to the brink

“We are experiencing an exceptional situation,” Murat Agac, deputy chief executive of the family-owned company founded in 1622, told AFP.

“If there is a halt in gas supplies… then glass production will very likely disappear” from Germany, he said.

To make glass, sand is heated to temperatures of up to 1,600C and gas is the most frequently chosen source of energy.

Until recently, a glut of gas flowing to Germany via a pipeline from Russia had helped keep production costs low, allowing Heinz-Glas to book annual revenues of some €300 million.

With competitive prices, exports made up 80 percent of the glassmaker’s total output.

But this economic model is now being called into question after Russia’s invasion of Ukraine.

READ ALSO: Energy crisis to labour shortage – Five challenges facing Germany right now 

Moscow has cut gas supplies to Germany by 80 percent, in what is believed to be a bid to weaken the resolve of Europe’s biggest economy in backing Ukraine.

Berlin is scrambling for alternative energy sources to replace the resource that once made up 55 percent of its total gas imports.

The consequence: soaring energy prices.

For Heinz-Glas, that has meant a “ten- to 20-fold increase” in costs compared to 2019, said Agac.

READ ALSO: German government fears millions of heating systems could fail in winter

‘3,000 football fields of solar panels’ 

Not only Heinz-Glas, much of Germany’s industry is buckling under the gas supply crunch.

Many companies are drawing up emergency plans as the German government has warned that Russian gas could stop flowing entirely.

With winter looming, the crisis is reaching fever pitch.

Chemicals giant BASF is looking at replacing gas with fuel oil in its second-biggest German factory.

Henkel, which specialises in adhesives and sealants, is considering whether its employees can work from home.

But the consequences of a total halt in Russian gas flows could be irreparable for many companies.

At the Heinz-Glas factory in Kleintettau, opened in 1661, around 70 tonnes of small glass bottles are produced each day, moulded by the heat of the furnaces.

An employee inspects flacons on an assembly line at the German glass producer Heinz-Glas Group in Kleintettau, Germany on August 3rd, 2022.

An employee inspects flacons on an assembly line at the German glass producer Heinz-Glas Group in Kleintettau, Germany on August 3rd, 2022. Photo: Ronny Hartmann / AFP

The delicate vessels adorned with intricate motifs are then sent to the company’s clients — including its biggest, French group L’Oreal — which fill them with perfume.

At every step of the production process — from making the material with quartz sand to the final sculpting of the bottle — heat is essential.

At the company’s second-biggest factory in the mountain village of Piesau, a cut in gas would permanently damage its glass furnace, said Agac.

To ward off the danger in the short term, Heinz-Glas has invested in stocks of liquefied gas, which can be driven in by trucks.

But that triples the energy bill, and would still not be sufficient – the two German factories need the equivalent of “3,000 football fields of solar
panels” to operate.

In the long term, replacing the entire gas system with electric infrastructure would cost €50 million, Agac said, a sum which the company cannot afford.

READ ALSO: Reader question – Should I modernise my heating system in Germany?

Even in the factory of Kleintettau, where furnaces are powered by electricity, around 40 percent of the industrial processes still require gas.

“We need state support,” said Agac, warning that the firm may otherwise be forced to shift production elsewhere, such as India or China, where it already has a factory.

For the 1,500 employees of the company in Germany, the future looks cloudy.

“I’ve reached an age when it doesn’t matter so much for me anymore. But younger people must be fearing job losses,” said Michaela Trebes, 61, inspecting hundreds of little flasks emerging from the production lines.

But for now, the management remains optimistic that Heinz-Glas can pull through.

Since 1622, “there have been enough crises… in the 20th century alone, World War I, World War II, the oil crisis in the 70s, many, many critical situations. We survived them all,” said Agac.

“We will somehow also overcome this crisis.”

By Florian CAZERES

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