German gas storage levy adds to energy consumers' woes

  • New storage levy will cost 13 eur/yr for avg household
  • Chancellor Olaf Scholz says VAT on gas to be cut
  • Measures necessary because Russia sends less gas

BERLIN, Aug 17 (Reuters) – A charge to fund gas imports into Germany to boost national stocks has been set at 0.59 euro cents per megawatt hour (MWh), gas market operator Trading Hub Europe said on Thursday, feeding into a sharp rise in consumer energy costs.

The gas storage levy, set to kick in from Oct. 1, comes on top of another levy on end-consumers designed to distribute the cost of replacing Russian gas to utilities like Uniper (UN01.DE).

This will already cost an average family of four an additional annual 480 euros ($488), according to price platform Verivox’ assessment, while Thursday’s charge will add an additional 13 euros, a spokesperson for competitor Check24 said. read more

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The levies are part of a new energy security law Germany drew up this year in response to a drop in gas exports from Russia, which has become embroiled in an energy stand-off with the West since sending troops into Ukraine in February.

The new law obliges Germany’s gas market operator THE to tender for additional gas purchases on top of regular ones it carries out to balance supply and demand, and potentially to buy outright on the open market, sidestepping its usual tender process, if necessary to top up reserves.

The cost of the measures is initially charged to gas suppliers on the pipeline grid. That cost is then rolled over, under a supervised mechanism, all the way to end customers.

Customers must by law be notified of the levy six weeks in advance of the proposed Oct. 1 start date.

The storage levy, which will remain in place until April 2025, will be first calculated in the fourth quarter of 2022 and then every six months after that.

Economists have warned that the two new levies will further accelerate inflation in Europe’s largest economy.

Chancellor Olaf Scholz said that to cushion the blow from the additional charges, which will especially hurt poor households, the sales tax on gas would be reduced to 7% from 19%, to “keep the country together”. read more

Russia has cited turbine problems as its reason for cutting gas supply via the main line into Germany, Nord Stream 1, while other export channels are also unused, or at reduced capacity usage. Berlin calls the events politically motivated.

($1 = 0.9831 euros)

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Reporting by Vera Eckert; Additional reporting by Miranda Murray; Writing by Rachel More; Editing by Madeline Chambers and Jan Harvey

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Senior power correspondent for Germany with more than 30 years experience and focused on deregulated energy markets for power and gas, companies, networks, exchanges, renewables, policy, storage, future transport and hydrogen. A German native who has studied and worked in the United States and Britain.

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