A family in the German state of Brandenburg, near the capital Berlin, told their story on a call-in show on public RBB radio this week.
They said they were shocked to receive a letter from their local gas company notifying them of an upcoming price hike and asking them to pay a whopping €1,515 (US$1,477) a month for natural gas to heat their family home instead of €143 pay the outskirts of Berlin.
In Germany, households pay a monthly advance on their gas and electricity bills and receive an annual statement at the end of the billing year that compares the advance payments with the costs based on actual consumption.
A tenfold increase is simply not feasible, said the caller from Brandenburg on the radio show.
The gas supplier in the case mentioned is a rather small company that only supplies around 20,000 households and has long lured people with low prices. Now, in the midst of the current supply problems, it is hitting them particularly hard: the lack of gas supplies from Russia is forcing suppliers to buy elsewhere at higher prices and destroying their business model.
Reports like from Brandenburg are piling up now that it’s getting colder in Germany and the heating season is beginning. Many gas companies, as well as electricity companies, have started sending out notices announcing increases in monthly advances of three times or more.
According to the latest surveys, 40% of people in Germany expect problems paying their energy bills in the coming winter. Half of all German households heat with natural gas.
No cheap petrol anywhere
Consumer centers advise customers like the family from Brandenburg to look for a cheaper provider. But nowhere is it really cheap anymore.
Berliners fear a cold winter as energy prices rise dramatically
According to its own statements, customers who obtain their gas from one of the major “basic suppliers” (the largest supplier in a region) are in a comparatively good position.
Basic providers find it difficult to turn down new customers, and they can only do so when they are in serious economic trouble themselves. From November 1, basic suppliers such as GASAG will no longer be allowed to charge different prices to old and new customers.
Smaller energy suppliers, on the other hand, retain their flexibility.
GASAG has also drastically increased its prices since the outbreak of war in Ukraine: First, it increased the monthly gas advance by around 50 percent, and will double it by November. However, further price increases cannot be ruled out.
“No one should have to suffer, no matter how cold it gets,” company boss Georg Friedrichs told Berlin daily mirror newspaper in an interview. But he refused to offer any forecast as to how much and how quickly prices could continue to rise.
Gas is also required for 11% of German electricity generation
High prices are here to stay
Finance Minister Christian Lindner from the business-friendly Free Democrats (FDP) warns of difficult times. “We assume that in the foreseeable future – in 2023 – we will see a normalization of prices. Not back to the old level, but somewhere near the world market price for LPG,” he said recently. Liquefied natural gas (LNG) is now increasingly being bought by many countries, including Germany, as a substitute for cheap Russian gas.
At an industry event in Berlin, he conceded that gas prices would remain a “challenge”. He said his government now faces the task of “building a bridge to a new normal of higher energy prices”. This means that people would have to get used to the fact that energy will remain expensive in the long term.
Finance Minister Christian Lindner (left) and Economics Minister Robert Habeck warn of rising energy prices
The controversial gas surcharge
Another price driver for gas is the state surcharge, which will be introduced on October 1st after a long back and forth. It has been set at 2.419 euro cents per kilowatt hour and is to be paid by all gas-using households and businesses in the country to prop up struggling utilities. Economists estimate that the levy will cost an average household another 600 euros a year.
However, the levy can be increased if the price of natural gas continues to rise. Since around 11% of Germany’s electricity is still generated with natural gas, many economists are also expecting a significant increase in electricity prices. So the consequences of the Russian attack on Ukraine will really hit the Germans in the coming months.
So the most effective way to reduce energy costs is to save wherever possible. The consumer center Stiftung Warentest has calculated that a family of three can save around 970 euros a year on electricity and gas with just a few measures: through less hot water consumption, fewer showers and lower water temperature and the installation of an energy-saving shower head system. Lowering the average room temperature to 20 C (68 F) also makes a noticeable difference. And wherever possible, laundry should be hung out to dry rather than thrown into a power-guzzling tumble dryer.
German households get tips on how to save gas with less hot water
The opposition is calling for a price cap
However, it is still unclear how low-income households are to cope with the high prices. The Bavarian CSU has now proposed a model for a gas price cap for three quarters of the heat consumption in private households.
“It would be conceivable for private households to cap 75 percent of their current gas purchases at a basic price for citizens,” said CSU politician Alexander Dobrindt to the regional Augsburg General Newspaper. “Moreover, they would have to pay the price,” he added.
However, critics of this proposal have pointed out that it would require subsidies that would put a huge strain on public coffers and put the government back in massive debt.
This article was originally written in German.
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