New gas levy in Germany to land consumers with higher bills
Households in Germany will face significantly higher gas bills this autumn, after a new law comes into effect, allowing energy companies to pass on rising prices to consumers. According to some price comparison portals, the change could see households paying up to 1.000 euros more per year.
Gas bills in Germany to rise from October with new Gasumlage
The German federal government has recently signed off a new gas levy (Gasumlage), which is expected to apply to utility bills from October 1 until the end of March 2024. The levy is designed to help energy companies in Germany that have been struggling with the rising price of gas imports - as the federal republic seeks to wean itself off Russian gas - by allowing them to pass up to 90 percent of their cost increases onto customers.
It will apply to all customers, including those on long-term contracts with price guarantees - both private households and businesses. However, at this stage, it’s not clear exactly how much prices will rise.
Gas levy will be between 1,5 and 5 cents per kilowatt hour
Federal Economics Minister Robert Habeck said that the levy would be somewhere between 1,5 and 5 cents per kilowatt hour, or around 500 euros per year for a family of four. German Chancellor Olaf Scholz previously spoke of an increase of 200 to 300 euros per year.
However, if the levy ends up landing towards the higher end of the government’s estimate, the additional burden for consumers could be a lot more. According to the comparison portal Check24, a family of four with an annual consumption of 20.000 kilowatt hours would see their bills increase by 476 euros per year with a 2-cent surcharge. With a 5-cent surcharge, their bill would spike by 1.190 euros.
The change will affect millions of people across Germany - since about half of all houses and apartments in the country are heated with gas-powered systems - at a time when household finances are already being strained by soaring inflation.
Describing the levy to dpa as “not a good step, but a necessary step”, Habeck promised that no one would face financial hardship as a result, and said that support measures would be implemented for those struggling with their bills.
Gas companies struggling with rising prices
The government has said that the levy is needed to help maintain the country’s gas supply over the winter. With Russia squeezing supplies to Europe and the bloc seeking to diversify its energy mix, prices are rising rapidly and energy companies are currently forced to cover these cost increases themselves. “Without [the levy], gas suppliers throughout the supply chain would be at risk,” the Federal Ministry of Economics told dpa.
The exact amount of the levy should be published by mid to late August, according to the ministry, with an ordinance set to be put to the federal cabinet soon. The levy will be set at the same level for all gas suppliers in Germany.