Soon, German households might have to reckon with a surcharge of €500 a year for their gas use.
A new levy, to be imposed starting October 1st, is meant to help utilities companies cover the cost of replacing Russian gas supplies, and will be in effect until April 2024. Berlin has assured its citizens it will come up with relief measures, Welt reports.
German gas market operator Trading Hub Europe made the announcement on Monday. Their new rate, set at 2.419 euro cents per kilowatt hour (kWH), is meant to offset losses Uniper and other importers have incurred by soaring prices in Russian gas imports. The money would also be spent on buying gas from other suppliers.
For single-family households with an average annual consumption of 20,000 kilowatt hours, additional costs could mount to about €484 per year. With value-added tax (VAT) factored in, that number could reach €576. This, of course, comes in addition to market-related price increases.
According to Robert Habeck’s Ministry of Energy, the surcharge will not be immediately visible to consumers, but will likely appear on gas bills for November or December. Habeck (Die Grünen) explained that the levy is “by no means an easy step,” yet necessary to maintain a reliable supply of energy for private households as well as the economy.
Energy-intensive industries, such as the chemical and metal industries, as well as manufacturers and processors of glass, ceramics, stone and earth will be hit hardest. So says the German Economic Institute (IW), which expects an additional cost of €5.7 billion due to the levy. According to energy expert Thilo Schaefer, “these three sectors alone bear more than half of the additional costs.”
As reported by Reuters, according to German steel group WV Stahl, the levy would mean an additional €500 million a year to that sector’s energy bills. It was already dealing with €7 billion of extra costs attributed to high energy prices.
Economists are warning that the levy would accelerate inflation, already well over the 7% mark in Europe’s largest economy.
Defending the need for such a levy due to energy prices having risen “as a result of the Russian war of aggression,” Habeck, conscious of “those who don’t have much,” and for whom it is “a heavy burden that is difficult or impossible to bear,” said the levy must and will be accompanied by another relief package. He went on to emphasize that the state should not gain any revenue in VAT from the levy.
To that end, Finance Minister Christian Lindner (FDP) has written to Brussels asking for an exemption from the EU so that German households would be spared these VAT costs.
Russia, which blames its reduction in gas flows to Germany on technical problems and western sanctions, has been accused of acting out of political motivations. Its deliveries via the Nord Stream 1 pipeline—resumed last month—are currently at 20% of its capacity.
Just last week, Chancellor Olaf Scholz (SPD) had promised Germans relief for the sharp rise in energy prices; something which, in light of the levy, he has now, along with Habeck, reiterated.
Meanwhile, opposition parties are reacting with scorn to the Scholz government’s handling of Germany’s energy woes.
CSU for Bavaria leader Alexander Dobrindt voices sharp criticism for a relief program not having been presented at the same time as the levy’s announcement. “To present the gas surcharge without a simultaneous relief program is disrespectful,” he said.
Ramona Pop from consumer protection group Der Bundesverband der Verbraucherzentralen called for its postponement. She felt it had not been clarified exactly when energy supply companies would demand the levy’s payment from their customers. According to her, it must also be made absolutely clear that the state does not earn money from the levy with the VAT. She also demanded that the levy should be tax-financed “as long as the coalition is arguing about further relief measures.”
At the headquarters of Die Linke (The Left), mobilization is going beyond mere contemplation. Calling it a “resounding slap in the face” while accusing the government of “social coldness,” it is urging citizens to demonstrate on the streets.
Days earlier, party leader Martin Schirdewan had already called for street protests over the government’s handling of the energy crisis. Having already announced a “hot autumn of social protests,” the new levy has only further inflamed his party. Because the federal government has decided on an anti-social course, “we will support this protest and will also organize it where we can,” he said. Once more, he called for a price cap on gas, and that basic needs for heating and cooking should be made available to all at a fixed price. Only additional consumption should cost more, he said.
Sören Pellmann, Die Linke’s leader in the eastern canton of Saxony, had previously called on citizens in eastern-German states to hold demonstrations. The gas levy is a “blow against the East,” he said, adding that “people should fight back.” States in Eastern Germany have traditionally had lower incomes than the rest of the country, and are suffering the worst in this crisis.
The levy comes only days after Habeck announced his plan for reducing Germany’s gas use by 20%. Among other measures to achieve this aim, he wants to allow 186,000 of Germany’s public buildings only to be heated at a maximum of just 19 degrees. Illuminating monuments and buildings for purely aesthetic reasons would also be scrapped.
By doing this, Habeck seeks to exceed the voluntary EU target of 15%, meant to last from the beginning of August to the end of March. “According to the current state of things, Germany has to achieve around 20% of savings in gas to avert shortages,” a paper from his ministry stated; 5% to 8% of that total has already been reached, it said.
Final authorisation of these plans, which would come into effect on September 1st, rests with Chancellor Scholz’ cabinet; it does not need to meet the approval of the Bundestag, nor the Bundesrat.