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Status: 08/25/2022 08:17 a.m
The new gas surcharge is intended to cushion the high extra costs incurred by energy companies. But profitable companies have also applied for money. The criticism of it is getting louder. Is the allocation incorrectly constructed?
From October, many Germans will have to dig deeper into their pockets for their heating or hot water and pay a gas surcharge of 2.4 cents per kilowatt hour. The federal government wants to prevent energy companies from getting into financial problems and the gas supply from collapsing. In view of the lack of deliveries from Russia, importers sometimes have to buy their gas on the expensive spot market in order to fulfill their contracts.
A large part of the surcharge goes to Uniper
Twelve companies have now asserted their claims for compensation payments. According to the Federal Ministry for Economic Affairs and Climate Protection (BMWK), the claims total around 34 billion euros. However, while the energy company RWE is only formally listed and bears its own losses, according to information from the news agencies Reuters and dpa more than 90 percent of the money to Uniper and the former Gazprom Germania. Both are considered “systemically relevant” for the security of supply in Germany.
The largest German gas importer, Uniper, declared last week that it would receive more than 50 percent of the levy, but without naming an exact amount. Mainly due to failed deliveries from Russia, the Düsseldorf group made a loss of 12.4 billion euros in the first half of the year and was on the verge of bankruptcy in the meantime. Because of Uniper’s great importance for the energy supply, the federal government had launched a rescue package together with the parent company Fortum.
The former Gazprom Germany subsidiary, which was renamed Securing Energy for Europe (SEFE) in the course of the Russian attack on Ukraine and is currently in trust with the Federal Network Agency, is to be accounted for around 25 percent – together with its main contractual partners Wingas and VNG. Although the company has already been supported with almost ten billion euros, it is still in a difficult situation. SEFE supplies around 30 percent of the gas consumed in Germany.
“Not necessary for some companies”
The remaining eight percent of the levy is allocated to the remaining eight companies. It is questionable whether they are also dependent on the compensation payments. “For some of these companies, the gas surcharge is not vital and therefore not necessary,” says Andreas Schröder, head of energy analysis at the energy market researcher ICIS tagesschau.de.
“I find the original idea of using stabilization measures to avert insolvencies of systemically important importers understandable,” says Heiko Lohmann from the energy information service Energate in an interview tagesschau.de. The design of the gas allocation, on the other hand, is not precise and therefore questionable. Because the linking of the application to a risk of insolvency is not included in the ordinance for the introduction of a gas levy (paragraph 26 of the Energy Security Act). “I find it difficult that the circle has now been expanded at will,” said the expert.
There were only three criteria for an application. The respective company must import natural gas to Germany, be directly affected by the supply failures from Russia and have concluded the contracts before May 1st. The curious thing is that corporations such as the Austrian utility OMV, which more than doubled its operating result in the first half of the year, were also able to contact the Trading Hub Europe (THE), which is responsible for the funds.
There is no risk of bankruptcy
It still seems unclear how high the payments to the companies will actually be in the end. The list does not yet represent a verified claim, explained THE as a joint venture of the gas network operators. The actual amount will only be determined when further certified information is available.
In any case, it doesn’t matter whether a company is about to go bankrupt or is making billions in profits. A spokeswoman for the Ministry of Economics also confirmed that “impending insolvency” is not one of the criteria for the gas surcharge. “We are of the opinion that a company must also make a profit in order to position itself more broadly and ultimately become less dependent on Russian gas supplies.”
This view has met with massive criticism. “The gas levy is almost an excess profit levy – even corporations with billions in profits receive money, the citizens pay through the gas bill. This chaos levy brings bureaucracy, uncertainty and a redistribution from bottom to top,” said Jens Spahn, Vice President of the Union faction. SPD General Secretary Kevin Kühnert called on the Ministry of Economic Affairs to legally rule out that economically stable companies benefit from the state gas levy. “If even healthy companies with lavish profits can get money from the gas surcharge, then consumers in Germany will not be securing their existence, but the returns of the owners.”
Is a “communicative fiasco” imminent?
Many experts take a similar view. “Obviously, the levy also finances companies that are not in trouble,” says ICIS specialist Schröder. This is hardly communicable for end customers. The instrument could become a “communicative fiasco”. “Companies with profits are not distressed.”
From Schröder’s point of view, the federal government should adjust the gas levy so that it only benefits companies that make strict commitments – such as no longer paying dividends to shareholders or capping bonus payments. “In order to avoid free-rider effects and excess profits, we as legislators must also be prepared to tighten the criteria for claims in case of doubt,” said Dieter Janecek, economic policy spokesman for the Greens parliamentary group, to the “Handelsblatt”.
“Mitigating Further Losses”
The Oldenburg supplier EWE, for example, is the focus of criticism. In the past financial year, the company earned around 355 million euros, and it also has a financially strong partner at its side in the investment company Ardian. EWE assumes that the sum in question is less than 0.1 percent of the total pot. Does the company really need the money?
“The prerequisite for a payment is that additional costs have arisen for the procurement of replacement natural gas imports from Russia,” it says at the beginning of tagesschau.de from the provider. “This is the case: EWE had to buy the missing quantities at ten times the price in order to be able to comply with supply contracts with customers at the agreed lower purchase price. This resulted in corresponding losses.”
The Leipzig company VNG also wants financial compensation – although the co-owner EnBW achieved 1.4 billion euros in the first half of the year. EnBW boss Mastiaux recently even publicly stated that an imbalance at VNG was unlikely. On request from tagesschau.de the company says they are “Due to the replacement procurement that has been necessary for some time now, significant losses have already occurred at VNG”. The application for money from the gas levy is about “mitigating further losses that are foreseeable”.
Claims despite profitable business
The foreign companies Gunvor (Cyprus), AXPO (Switzerland) and OMV (Austria) also deliver gas to Germany – and were therefore able to assert claims. OMV recently achieved an operating result of around 5.5 billion euros. It is “in the sense of the law” to demand money from the gas surcharge, the company only says. AXPO made a profit of around 500 million Swiss francs in the past financial year. The gas levy covers “only part of AXPO’s loss,” the supplier said tagesschau.de. You have had to “procure the energy that has not been supplied on the market for months at a financial loss”.
Observers predict, however, that the gas surcharge will continue to rise after its introduction. “The price movements on the markets are overturning, and the gas surcharge reflects the actual price increases too weakly,” says expert Schröder. The market is reacting with trepidation to Gazprom’s announcement that it will suspend gas flow through Nord Stream for three days.