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What gas customers in Germany need to know this autumn

Germany's gas levy has been dropped and a price cap is on the way. But there are some other changes coming from October including a VAT cut and smaller surcharges. Here's what it means for your bills.

Cash on a radiator in Germany.
Cash on a radiator in Germany. Photo: picture alliance/dpa/dpa-Zentralbild | Patrick Pleul

The German government is reducing the value-added tax (VAT) on gas consumption. The rate will be reduced from 19 to seven percent, for a limited period from October 1st until the end of March 2024.

But that is not the only change for gas bills this autumn, though the government says it will no longer levy the gas procurement surcharge of 2.419 cents per kilowatt hour (kWh), which was also originally planned to take effect on October 1st. Instead, two other smaller levies will be due: the gas storage levy and the balancing energy levy. 

Here’s a look at what it means for households.

READ ALSO: Why did Germany make a u-turn on gas levy – and what do the new plans mean?

What does the VAT cut mean?

The VAT cut was originally meant to offset the major gas levy. Even though these plans have been shelved, the VAT cut – down from 19 to seven percent – is still happening. This should have a big effect on people’s bills.

According to the comparison portal Check24, this change would relieve a family by around €306 a year. A single person would see savings of around €87. These calculations are based on a yearly annual consumption of 20,000 kWh for a family, and 5000 kWh for a single household.

What about levies?

The gas procurement levy is off the table, but two other new surcharges will be added to bills from October 1st. These are the balancing energy surcharge or Regelenergieumlage (0.57 cents/kWh) and the gas storage surcharge or Gasspeicherumlage (0.059 cents/kWh).

For a household with an average yearly consumption of 20,000 kWh, the balancing energy levy increases the gas bill by €114 a year, while the gas storage levy adds another €12.

For a single household, the new surcharges will increase the annual gas bill in total by about €31.45.

However, the bottom line is that the various changes on October 1st will result in an average reduction of €180 for a family in Germany while a single person will have save on average €55.55.

Despite these changes, there is no escaping the general trend for rising gas prices compared to a year ago.

And the gas price for consumers reached a new record value of 21.9 cents per kilowatt hour in September.

That means a sample household with a consumption of 20,000 kWh pays on average €4,371 a year for gas usage. In September 2021 the same quantity of gas cost €1,316, according to Check24, meaning that the average gas bill has more than tripled within a year.

This will particularly affect people coming to the end of their contract or starting a new one where they will face the steep prices. 

Gas price cap coming

In view of the rapidly rising gas costs, relief for consumers provided by the reduction in VAT is probably only a drop in the ocean, especially as it will be counteracted to some extent by the two new levies effective from October 1st.

The gas price cap, which the government has agreed on in principle, is therefore the only measure likely to bring tangible relief for households and also companies.

Details of how this will be implemented are not yet available, although proposals are to be presented soon. Much will depend on how high the state-subsidised “base consumption” of gas for households is set.

READ ALSO: Germany to spend €200 billion to cap soaring energy costs

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ENERGY

German energy firm RWE takes Gazprom to court over supply halts

German's RWE said Tuesday it is taking legal action against Russia's Gazprom over halted gas supplies, the latest German company to do so since Moscow invaded Ukraine.

German energy firm RWE takes Gazprom to court over supply halts

Following the invasion, Gazprom steadily dwindled pipeline supplies to Germany in apparent retaliation for Western sanctions on Russia, sending energy prices soaring.

Last week, German energy giant Uniper said it was seeking damages from Gazprom at an international tribunal, as the Russian company’s failure to deliver gas had cost them billions of euros.

READ ALSO: Germany’s Uniper takes Gazprom to court over halted gas supplies

An RWE spokeswoman confirmed to AFP the company had also launched action, but declined to give further details.

Gazprom’s failure to deliver promised supplies has meant that German companies, long heavily reliant on Russian energy, had to buy gas on world markets at far higher prices.

Financial daily Handelsblatt reported that the costs incurred by RWE were likely lower, at around €1 billion, than those faced by Uniper.

Uniper had far larger contracts, and has put its losses from the supply halts at €11.6 billion. Gazprom has rejected Uniper’s claims.

The company, Germany’s biggest gas importer, has agreed a deal to be nationalised after Russia’s drastic reduction in supplies pushed it to the brink of bankruptcy.

READ ALSO: How Germany became ensnared by Russian gas

It reported a €40 billion net loss for the first nine months of the
year, one of the biggest losses in German corporate history.

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