Germany Proposes Consumer Levy to Fund Emergency Gas Reserve

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(Bloomberg) — The German government has proposed adding a surcharge to consumer energy bills to help finance a strategic natural gas reserve designed to keep supplies flowing in a worst-case crisis.

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The cost would be passed on to consumers through a levy of €0.29 ($0.33) to €0.36 a megawatt-hour, an economy ministry spokesperson said in an email to Bloomberg News. For a typical single-family home, that would add costs of €3.77 to €7.20 a year, though for heavy industrial users the additional burden could amount to millions of euros.

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Discussions about an emergency gas buffer have picked up in recent months after the Iran war underscored Europe’s continued vulnerability to sudden supply disruptions. While the region introduced legal targets for filling up commercial gas inventories during the 2022 energy crisis, those levels have proven difficult to reach in recent years. The thinking is that a smaller strategic reserve would help to relieve some pressure on the market while ensuring that Germany is prepared for unexpected shocks.

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The government’s plan envisions an emergency gas buffer of around 24 terawatt-hours, or about 10% of its storage capacity. That would secure supply for households and businesses for around two weeks during a normal winter if all imports were cut off. One-time costs for setting the buffer up have been pegged as high as €1.5 billion.

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The new levy is likely to face resistance. Germany already abolished a separate surcharge this year that helped fund the filling of regular gas storage sites. At €2.89 per megawatt-hour, that charge was about 10 times higher than the proposed emergency levy, but the decision to fund it via the state was intended to lower energy costs for businesses.

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Under the plan, auctions for emergency sites distributed across Germany would be organized by market manager Trading Hub Europe GmbH, which confirmed the deliberations. The government aims to present a draft law in the summer, the economy ministry said.

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