Gas price cap: balancing act between relief and incentive to save

Created: 10/03/2022, 2:30 p.m

Only one apartment in an apartment building has a light on in the early morning.

The sometimes massive rise in prices for gas and electricity is causing financial difficulties for many people in Germany.

© Julian Stratenschulte/dpa

Consumers and companies should be supported by the state with a lot of money because of the skyrocketing energy prices.

But how long actually?

And can it be fair?

Stuttgart - The gas price brake planned by the federal government has triggered a debate about its concrete implementation.

One of the sticking points is the question of how savings incentives can remain despite the billions in relief.

According to the Federal Network Agency, the support must apply for a period of almost two years.

"We will be in some kind of tense situation at least until the summer of 2024," said Netzagentur President Klaus Müller in a podcast by Baden-Württemberg Finance Minister Danyal Bayaz (Greens).

The gas price cap will “certainly” be needed by then.

The amounts of Russian gas that would have to be replaced are "huge," said Müller.

First of all, the six liquid gas terminals and the connection to the hinterland would have to be built so that a lot of gas could flow from Belgium, France and Norway to Germany.

"It just takes time." The head of the network agency recommended that the government quickly present a model for a gas price brake.

"Politicians will have to have the courage to implement a quick and easy-to-administrate model at least for this winter of 2022/2023."

Müller fears that there will be a lot of arguments about where to draw the line for the lid.

"There will have to be a certain flat rate, which will be a touch unfair." Because the municipal utilities just don't know how many people live in a household.

That's why a calculation per capita is no longer necessary.

There will have to be a solution "where perhaps not all questions of individual justice are regulated, otherwise it will be so complex that nobody can implement it." The model can be refined for the winter after next.

Müller for relief, but also for savings incentives

Müller believes it is right to relieve citizens of the sharp rise in gas costs, but also insists on incentives to save.

Otherwise "we are faster than we would all like, just in a shortage situation".

The Network Agency President once again called on the population to save energy.

"If we don't manage to achieve at least 20 percent savings in private households, then we won't be able to get by in an average winter without cuts in industry."

The German Association of Cities also called for savings and warned the federal and state governments to remain united before talks this Tuesday in the Chancellery.

The gas price brake must "now be cleverly designed very quickly," said City Day President Markus Lewe (CDU) to the newspapers of the Funke media group (Online Monday, Print Tuesday).

If private households got a basic requirement of 80 percent of the gas consumption at a discount, the incentive to save would remain.

But not only consumers are in demand: With a so-called gas auction model, the federal government wants to give industry incentives to save gas and make it available for heating, for example, for a fee.

The model started at the weekend, as the German Press Agency learned from the Ministry of Economic Affairs.

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Gas allocation is off the table

On Thursday, the traffic light coalition announced a new “defense shield” of up to 200 billion euros to support consumers and companies because of rising energy prices.

The controversial gas levy is off the table - there should be a gas price brake for that.

At least for part of the consumption, the prices should be capped in such a way that private households and companies are not overwhelmed.

What that means exactly is still unclear.

A commission is to make proposals by mid-October.

Federal Finance Minister Christian Lindner does not want to exhaust the targeted maximum amount.

"Our efforts must be aimed at not exhausting the 200 billion if possible," said the FDP politician of the "Rheinische Post" (Saturday).

You have to expand the energy supply in order to lower market prices.

The FDP youth organization is already asking the government to set an end date for government intervention in setting energy prices.

Opposition politicians are already demanding clarity from the federal government about the distribution of gas in the event of a shortage.

“The very expensive gas bought in our storage facilities has to reach German consumers in winter.

For this purpose, the traffic light must finally present a withdrawal plan," said Jens Spahn (CDU), Union parliamentary group leader, of the "Bild am Sonntag".

The left-wing parliamentary secretary Jan Korte criticized the Funke media group that the government was silent about "according to which criteria the gas should be distributed in a crisis".

The report of the "Bild am Sonntag" also points out that the gas stored in Germany is not reserved for German consumers and companies, but can also be awarded to internationally active corporations.

However, the Ministry of Economics sees no reason for criticism.

Anything else would ignore the requirements of the European single market, a spokeswoman said on request.

“Mutual solidarity” applies.

According to calculations by the International Energy Agency IEA, in order to keep gas reserves in the EU at an appropriate level until the end of the heating season, demand would have to be reduced by 9 to 13 percent compared to the average of the past five years.

Without reduced gas consumption and with a complete Russian supply stop from November, the storage levels could drop to almost five percent if only little liquid gas is delivered to the EU at the same time.

Then there would be an increased risk of supply disruptions during a late cold snap.

dpa