‘Save now’: German energy regulator warns gas prices could triple

The head of Germany's Federal Network Agency has urged households to prepare for a tripling of gas prices in 2023.

Woman cooks on gas hob
A woman cooks on a gas hob at home. Photo: picture alliance/dpa | Annette Riedl

“For those who are now receiving their heating bills, the installments are already doubling – and that’s not even taking into account the consequences of the Ukraine war,” the agency’s president, Klaus Müller, told RND on Thursday.

“From 2023, gas customers will have to prepare for a tripling of the monthly costs, at least.”

Asked whether that meant that people who currently pay €1,500 per year would be hit with an annual bill of €4,500, Müller said he thought that was “absolutely realistic” and could even be higher.

The energy regulator explained that gas prices for for energy companies had increased as much as sevenfold in the wake of Russia’s invasion of Ukraine and continued global supply issues.

“Not all of this will reach consumers immediately or in full, but at some point it has to be paid for. And that is why it makes so much sense to save now,” he said.

According to price comparison site Verivox, only one in three households has so far received an annual bill for gas and around half of these have paid an average of €227 in arrears.

For a good third of households with gas heating, the rates for the coming heating season had increased by an average of €52 per month. For new customers with a gas consumption of 20,000 kilowatt hours, the prices had increased by an average of 159 percent or €1,963 per year compared to the previous year.

Energy bailouts

In recent days, German energy giant Uniper has approached the government for financial support as it revealed it was losing tens of millions of euros each day in the current crisis. 

READ ALSO: Uniper asks Germany for bailout as gas crisis causes heavy losses

These dramatic shortfalls have arisen after Russia cut the gas supply through the Nord Stream 1 pipeline by 60 percent, meaning energy companies have been forced to buy gas elsewhere at much higher prices. 

Asked what he thought of passing on these higher procurement costs to customers via a levy, Müller said this was a “political decision that has to be weighed up very carefully”.

He said billions could be raised to prop up the struggling energy firms that way. “The other option is to pass on the prices (to consumers) and then help those who can no longer bear them,” he added. 

Households have priority

Müller’s comments come after Economics Minister Robert Habeck (Greens) warned that energy price increases could be “in the four-digit region” this year and questioned whether the existing gas emergency plans were fit for purpose.

Currently, if a state of emergency is declared, private households are the last to get their energy turned off, while businesses and industries are the first in line. But Habeck has said these rules weren’t intended for a situation where gas was potentially restricted for months on end. 

Nevertheless, the head of the Federal Network Agency quelled fears that private households could be given lower priority in the event of a gas shortage.

“The German and European legal situation provides for protecting private households until the end,” Müller affirmed. “Even in the worst case scenario, Germany will continue to get gas from Norway and from terminals in Belgium or Holland, and soon also directly from terminals on the German coast.”


Federal Network Agency

Klaus Müller, president of the Federal Network Agency. Photo: picture alliance/dpa | Oliver Berg

He said a situation in which there wasn’t gas reaching people’s home was “highly unlikely”. 

On Monday, Russia turned off the gas supply through the Nord Stream 1 Baltic Sea pipeline due to routine maintenance work that is due to run until July 21st.

However, some are concerned that the routine maintenance could be used as an excuse for Russia to turn off the taps entirely. 

“It looks as if Russia is severely restricting the gas or will not supply any more in the long run,” Rainer Dulger, head of the Employers’ Association, told the Süddeutsche Zeitung on Thursday. “We are facing the biggest crisis the country has ever had.”

READ ALSO: Is it legal for German landlords to turn down heat this winter?

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Germany’s power supply secure ‘even with earlier coal exit’

Germany's electricity supply during this decade is secure even if the country were to bring its coal exit forward to 2030, according to a government-commissioned report on Wednesday.

Germany's power supply secure 'even with earlier coal exit'

The Federal Network Agency found that Germany’s power needs can be met “at all times” between 2025 and 2031 if the country follows through on plans to massively ramp up renewables and expand the energy grid.

“This will also be the case if energy consumption rises significantly because of new consumers such as electric vehicles and heat pumps, and the coal phase-out takes place by 2030,” the report said.

Europe’s biggest economy is speeding up its green energy transition after Russia’s war in Ukraine sent gas and electricity prices soaring and left Berlin scrambling to diversify supplies.

READ ALSO: Energy prices could double long-term in Germany, utilities companies warn

To help compensate for the shortfall in Russian gas deliveries, the government even restarted mothballed coal-fired power plants.

But Economy Minister Robert Habeck — from the ecologist Green party — has repeatedly said the measure was temporary and that Germany remained committed to quitting dirty fossil fuels.

The government aims to bring forward Germany’s coal exit to 2030, but has faced pushback from several eastern states that prefer to stick to the previous 2038 deadline.

Habeck on Wednesday acknowledged that there was “no agreement” on the end-date yet.

By 2030, the government wants 80 percent of Germany’s electricity to come from wind and solar power.

Berlin has pledged to cut red tape for installing wind turbines to meet the ambitious target, but observers say the pace is still too slow.

“We’re working on all fronts to become faster, more efficient,” Habeck told reporters in Berlin.

As part of the shift away from fossil fuels, the government also plans to only allow new gas-fired power plants if they can be converted to run on clean hydrogen.

“Gas is OK for the transition phase, but we need to get away from gas and switch to hydrogen power as soon as possible,” Habeck said.

READ ALSO: Is now a good time to switch energy providers in Germany?