Federal government plans how the providers protective shield should help

Federal government plans: how the provider’s protective shield should help

Status: 05.07.2022 14:48

Due to the financial difficulties of the Uniper group, the federal government wants to guarantee the energy sector and supply, but also allow price jumps to be passed on. What instruments does the protective shield contain?

High gas prices on the world market due to shortages of Russian gas are threatening the existence of energy companies in Germany. The federal government is therefore introducing a package of laws designed to protect companies in the industry from possible bankruptcy. The cabinet approved the Energy Security Act reform bill in a written circulation procedure. If the changes are approved by the Bundestag, the federal government could use a range of instruments to protect the energy sector from financial turmoil.

“We will not allow ourselves to have a systemic effect on the German and European gas market,” Economy Minister Robert Habeck said in Berlin. It is important that the cabinet has launched other intervention options. It is not yet possible to say whether further support measures will be needed. “Of course the situation is tense.” Gas deliveries from Russia are sometimes no longer arriving, but suppliers have to fulfill their obligations to customers and purchase expensive alternative gas volumes in return. Habeck said it was important for him to have the full arsenal of opportunities before the summer break. However, these should be used with caution. “Whether and which we will use remains to be seen,” he emphasized.

State support for energy providers as a first option

The focus of the new opportunities is financial support to energy companies threatened with bankruptcy. You can get direct financial support. State participation in the company is also possible up to and including an acquisition. Just last week, the energy company Uniper asked the state for help because of high gas prices.

Direct support for suppliers also aims to ensure that drastic gas price increases do not initially have to be fully passed on to household and industrial consumers, or that they arrive late. That’s why business grants are called “first choice”.

Lufthansa rescue as a model

The state bailout of the airline Deutsche Lufthansa serves as a model case. The bill states: “Obstacles to the federal government’s rapid participation in companies to stabilize them will be removed in the interests of security of supply.”

As a major gas importer, Uniper plays a central role in Germany’s energy supply and provides many municipal utilities. However, the company is currently unable to pass on additional costs in purchasing gas to customers and is therefore in a difficult financial situation. According to information from the Bloomberg news agency, aid funds of up to nine billion euros can now support the group.

Additional costs may also be passed on

However, the government can also use a second option so that financial aid to companies does not have to be extended further and further if gas prices continue to rise. Under the bill, it is planned to pass on additional costs for procuring substitutes for missing Russian imports. These costs could be spread among customers in the short term, despite existing contracts.

However, this is only possible if a “gas shortage” is officially established. This regulation would replace a previous one, under which individual suppliers can pass on their respective additional costs directly to their own customers.

Government may make ambient temperature specifications

In the event of a lack of gas, however, the legislator wants to arm itself with other options. According to the bill, it should therefore also be possible to define specifications for ambient temperature or for the replacement of gas by other fuels in the industry. This should also be possible in early summer if there is a foreseeable shortage. These requirements could already take effect in the summer if the gas storage facilities cannot be filled to 90% as planned by the start of winter.

Another law is expected to pass this week that will allow abandoned coal-fired power plants to replace gas-fired power plants in electricity generation. Among other things, a surcharge on the price of gas is possible, which should stop the gas being burned at the plants.

Government wants protective shield for energy companies

Marcel Heberlein, ARD Berlin, 5 July 2022 15:22