Berlin Consumer advocates criticize the amendment to the Energy Security Act (EnSiG) passed by the Bundestag. They are calling for the so-called price adjustment clause to be adjusted and are seeking help from the Federal Council. The state chamber has the amendment on Friday’s agenda. The law requires approval.
Thomas Engelke from the Federation of German Consumer Organizations (VZBV) told Handelsblatt that the companies’ price adjustment options were “much too generous”. Engelke added: “In the event of bottlenecks in the gas supply, the price increases hit private households with full force.” Many consumers are already confronted with a doubling of their gas bill.
Paragraph 24 of the amendment to the Energy Security Act contains a regulation that entitles energy companies to increase prices in the event of a gas crisis. This would apply if the second or third stage of the “gas emergency plan”, i.e. the alarm or emergency stage, was declared and the Federal Network Agency determined a significantly lower volume of gas imports.
Federal Minister of Economics Robert Habeck (Greens) announced the first of the three stages of the emergency plan at the end of March. At this stage, the energy suppliers have the right to increase their gas prices to a “reasonable level”.
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The suppliers must inform their customers in good time, and the customers in turn have a special right of termination. The aim of the regulation is to ensure that energy suppliers remain able to act and do not go bankrupt. They should still be able to buy gas and supply their customers even if the price rises sharply.
Energy industry welcomes law
The details of the price adjustment clause had been discussed for a long time in advance. The energy industry welcomes the law that was passed by the Bundestag last week. Kerstin Andreae, General Manager of the Federal Association of Energy and Water Industries (BDEW), said: “Due to sharply rising prices, the risk of crisis-related liquidity distortions is increasing for individual energy supply companies in the supply chain.”
This could create a domino effect that would affect other companies and ultimately threaten the energy supply. The price adjustment provided for in the amendment to the law could help prevent such upheavals.
“Of course, the price adjustment must not lead to an additional high burden for end customers. The state must therefore create conditions so that the high prices are cushioned directly and the problem of high payments does not arise with the customer at all,” said Andreae.
From the point of view of consumer advocates, however, there is a lack of appropriate cushioning. Engelke said: “In the event of even higher gas prices, additional financial compensation measures for people with low and middle incomes are necessary. The current relief packages are not enough.”
It is also “incomprehensible why the energy suppliers are allowed to increase their prices after one week after the Federal Network Agency has determined reduced gas imports, but are given four weeks to lower the price again after the determination has been lifted,” says Engelke.
The consumer advocates are demanding that energy supply companies are only allowed to increase their prices after four weeks.
(Photo: dpa)
The consumer advocates are demanding that energy supply companies are only allowed to increase their prices after four weeks. Further price adjustments should only be made after three months. “If the Federal Council does not improve the Energy Security Act this week, the federal government will have to push for a second amendment,” he added.
Avoid insolvency of gas suppliers
Jürgen Kühling, chairman of the monopoly commission, considers the price adjustment clause to be appropriate: “The law creates balanced regulations in a very challenging time,” he told the Handelsblatt.
It makes sense that the gas suppliers could pass on higher prices in the event of the alarm and emergency levels according to the gas emergency plan. In this way, insolvency of the gas suppliers can be avoided. “The prices cannot be increased at will. Rather, only the additional costs of purchasing a replacement can be passed on,” he said. “That’s also reasonable, since the suppliers have to procure expensive replacements through no fault of their own if the corresponding deliveries from Russia fail.”
This is how the Handelsblatt reports on the subject of energy:
In return, consumers are granted a special right of termination. There is also a bi-monthly right to review the adequacy of prices. “Of course, this regulation must also leave open questions of detail and many imponderables. In this case, however, it is a good compromise,” said Kühling.
Competition expert Justus Haucap, who chaired the Monopolies Commission from 2008 to 2012, also believes the regulation is fundamentally reasonable. The price adjustment clause appears to make “economic sense initially,” he told the Handelsblatt.
In view of the dramatic price increases that are to be expected in an emergency for gas, this could also have dramatic consequences for private households and companies.
Enforcing the price adjustment clause is therefore just as essential as partial compensation for customers. “Nevertheless, price increases must be passed on to consumers, at least in part, so that consumers have incentives to save energy,” he said. How effective the rule will be in stopping any price increase “depends heavily on effective enforcement,” he said.
Relief for low-income households
In Haucap’s opinion, politicians would be well advised to think now about relief, especially for low-income households, since otherwise they would hardly be able to cope with the multiplication of heating costs. “In addition, I still lack the honest communication that heating next winter – at least with gas heaters – will probably be really, really expensive,” said Haucap.
According to Daniel Zimmer, head of the Monopolies Commission until 2016, it is important “that the Federal Network Agency strictly monitors pricing after delivery volume reductions within the scope of its monitoring powers and that the Federal Cartel Office consistently follows up on indications of abuse”.
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