# German gas storage levy adds to energy consumers’ woes
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-08-18
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Germany Sets Gas Import Charge to Boost Stocks Amid
Meta Description: New levy of 0.59 euro/MWh to increase consumer energy costs. Chancellor reduces sales tax to cushion impact ahead of Oct. 1 start date.
URL: https://financedigest.com/german-gas-storage-levy-adds-to-energy-consumers-woeshtml

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By Vera Eckert

BERLIN (Reuters) -A charge to fund gas imports into Germany to boost national stocks has been set at 0.59 euro per megawatt hour (MWh), gas market operator Trading Hub Europe said on Thursday, feeding into a sharp rise in consumer energy costs.

The gas storage levy, set to kick in from Oct. 1, comes on top of another levy on end-consumers [designed to distribute the cost](https://www.financedigest.com/bmw-bets-on-design-and-recycling-not-mining-to-lower-battery-costs.html "BMW bets on design and recycling, not mining, to lower battery costs") of replacing Russian gas to utilities like Uniper.

This will already cost an [average family of four an additional annual](https://www.financedigest.com/average-annual-uk-food-bill-set-to-rise-454-pounds-as-inflation-soars.html "Average annual UK food bill set to rise 454 pounds as inflation soars") 480 euros ($488), according to price platform Verivox’ assessment, while Thursday’s charge will add an additional 13 euros, a spokesperson for competitor Check24 said.

However, to cushion the blow to consumers, Chancellor Olaf Scholz said [sales tax](https://www.financedigest.com/germany-to-lower-sales-tax-on-gas-to-7-in-bid-to-relieve-consumers.html "Germany to lower sales tax on gas to 7% in bid to relieve consumers") on gas would be reduced to 7% from 19%.

The levies are part of a new [energy security law Germany drew up this year in response to a drop in gas exports from Russia, which has become embroiled in an energy stand-off with the West since Moscow’s invasion of Ukraine in February](https://www.financedigest.com/energy-bill-support-pushes-uk-budget-deficit-to-february-record.html "Energy bill support pushes UK budget deficit to February record").

The new law obliges Germany’s gas [market operator THE to tender for additional gas purchases on top](https://www.financedigest.com/skull-deformity-implants-market-share-top-operating-players-recent-enhancements-and-regional-analysis-2028.html "Skull Deformity Implants Market Share, Top Operating Players, Recent Enhancements and Regional Analysis 2028") of regular ones it carries out to balance supply and demand, and potentially to buy outright on the open market, sidestepping its usual tender process, if necessary to top up reserves.

[INFLATION CONCERNS](https://www.financedigest.com/u-s-bank-executives-raise-concerns-over-inflation.html "U.S. bank executives raise concerns over inflation")

The cost of the measures is initially [charged to gas suppliers](https://www.financedigest.com/tesco-to-charge-online-booker-suppliers-new-fulfilment-charge.html "Tesco to charge online, Booker suppliers new fulfilment charge") on the pipeline grid. That cost is then rolled over, under a supervised mechanism, all the [way to end customers](https://www.financedigest.com/online-reputation-and-customer-centricity-will-lead-the-way-for-retail-banking-in-this-new-era-of-approachability.html "ONLINE REPUTATION AND CUSTOMER CENTRICITY WILL LEAD THE WAY FOR RETAIL BANKING  IN THIS NEW ERA OF APPROACHABILITY:").

Customers must by law be notified of the [levy six weeks before the proposed](https://www.financedigest.com/eu-will-propose-windfall-levies-on-energy-firms-von-der-leyen-says.html "EU will propose windfall levies on energy firms, von der Leyen says") Oct. 1 start date.

The storage levy, which will remain in place until April 2025, will be first calculated in the [fourth quarter](https://www.financedigest.com/german-gdp-contracted-by-0-4-in-the-fourth-quarter.html "German GDP contracted by 0.4% in the fourth quarter") of 2022 and then every six months after that.

Economists have warned that the two new levies will further accelerate inflation in [Europe’s largest](https://www.financedigest.com/uk-card-fraud-losses-climbed-18-percent-in-2015-largest-rise-in-europe.html "UK CARD FRAUD LOSSES CLIMBED 18 PERCENT IN 2015, LARGEST RISE IN EUROPE") economy.

Scholz, who has promised to help [households cope with higher gas bills](https://www.financedigest.com/44-of-uk-households-are-worried-theyll-have-to-foot-the-bill-for-net-zero.html "44% of UK Households are Worried They’ll Have to Foot the Bill for Net Zero"), announced a reduction in sales tax while the levies are in place.

With this step we are reducing the burden on [consumers more than we are adding to it with the charge,”](https://www.financedigest.com/demand-for-automotive-gas-charged-shock-absorbers-market-to-be-fuelled-by-rapid-shift-in-consumer-perception-and-increasing-awareness.html "Demand for Automotive Gas Charged Shock Absorbers Market to be Fuelled by Rapid Shift in Consumer Perception and Increasing Awareness") said Scholz, without giving any figures. He added that he [expected companies](https://www.financedigest.com/around-40-of-german-companies-expect-output-decline-in-2023-iw-institute.html "Around 40% of German companies expect output decline in 2023 – IW institute") to pass on the reduction to consumers.

Check24 said that a household consuming 20,000 kilowatt hours (kWh) and paying 3,717 [euros per annum would be saving 375 euros by the cut](https://www.financedigest.com/carrefour-unveils-30-euro-shopping-basket-in-spain-after-government-price-cut-proposal.html "Carrefour unveils 30 euro shopping basket in Spain after government price cut proposal") of VAT to 7% from 19%.

The move would [cost the state about 10 billion](https://www.financedigest.com/australias-nuclear-submarine-plan-to-cost-up-to-245-billion-by-2055-defence-official.html "Australia’s nuclear submarine plan to cost up to 5 billion by 2055 -defence official") euros through March 2024, a government official said.

The BDEW power industry association welcomed the step, [saying it could dampen a massive price](https://www.financedigest.com/uk-house-prices-stabilise-after-four-month-fall-halifax-says.html "UK house prices stabilise after four-month fall, Halifax says") rise but some economists warned that it was too little and that it was a blunt tool which would not help poorer households much.

Russia has cited turbine problems as its reason for cutting gas supply via the main line into Germany, [Nord Stream](https://www.financedigest.com/denmark-invites-nord-stream-operator-to-help-salvage-unidentified-object.html "Denmark invites Nord Stream operator to help salvage unidentified object") 1, while other export channels are also unused, or at reduced capacity usage. [Berlin calls the events](https://www.financedigest.com/change-the-face-of-leadership-gisma-business-school-hosts-women-in-business-event-in-berlin.html "Change the Face of Leadership: GISMA Business School hosts women in business event in Berlin") politically motivated.

($1 = 0.9831 euros)

(Reporting by Vera Eckert; Additional reporting by Miranda Murray; Writing by Rachel More; Editing by Madeline Chambers, Jan Harvey and Emelia Sithole-Matarise)


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