Germany rethinks gas surcharge after backlash over profits

Aug 26, 2022, 4:50 AM | Updated: 10:05 am

BERLIN (AP) — The German government is considering backtracking on plans for consumers to pay a surcharge on natural gas amid mounting criticism that the money could flow to highly profitable energy companies, officials said Friday.

The surcharge of 2.4 euro cents per kilowatt hour was announced two weeks ago and could cost the average household several hundred euros (dollars) a year. About half of German households use natural gas for heating, some also for cooking. The measure is due to take effect in October and is aimed at rescuing importers slammed by Russian cutbacks tied to the war in Ukraine.

Energy companies that previously relied on Russian gas are now scrambling to find alternative supplies, often having to pay considerably more due to sharply increased global prices while not being able to pass on all the difference to their customers due to fixed-price contracts. Others, though, have made higher profits from the higher prices.

The German government says the surcharge distributes the cost fairly among all gas users and helps prevent a collapse of major energy companies that could trigger a domino effect across the market.

But opposition politicians and consumer groups blasted the plan and even Economy Minister Robert Habeck acknowledged this week that some companies “that have made a lot of money” stood to profit from it. He told a meeting of business leaders Thursday that while those companies were legally entitled to claim a share of the surcharge, it was “not morally right” for them to do so and pledged to review the plan.

Habeck’s spokeswoman, Katharina Grave, said it would be “sensible” for companies to voluntarily refrain from accepting money resulting from the surcharge. German utility company RWE and fossil fuel giant Shell have already said they will shoulder the higher purchase costs themselves.

“On the other hand we are checking whether there can be arrangements that make it harder for profitable companies (to receive money),” said Grave.

Government spokesman Steffen Hebestreit said Chancellor Olaf Scholz supported those efforts.

“Now we first need to try to rule out in a legally sound way that this can happen,” he told reporters in Berlin.

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Germany rethinks gas surcharge after backlash over profits