Regulatory policy

The German government’s energy policy means billions in aid for companies and unbearable costs for consumers

Germany’s parliament plans to pass a package of laws this week giving energy companies billions in state treasury aid, but it will mean financial ruin and cold homes for working-class families. The government introduced the legislation on Tuesday and is passing on the costs of NATO’s proxy war against Russia in Ukraine to the wider population.

The “Bierwang” gas storage facility owned by the energy company “Uniper” in Unterreit near Munich (AP Photo/Matthias Schrader)

On May 21, the Energy Security Law, originally ratified in 1975 in response to the oil crisis at the time, was renewed. The new version allows energy companies to pass on price increases along the supply chain to end customers, even if they have committed to fixed prices in long-term contracts. They only have to announce the increase a week in advance. The prerequisite is that the Federal Network Agency – the German market regulator for electricity, gas, telecommunications, post and railways – invokes the second or third stage of the gas plan emergency.

The new laws go even further. They provide for the introduction of a tax, whereby price increases of particularly affected companies can also be passed on to the gas customers of all other companies. The levy is in addition to the price increases already planned.

The resulting increase in heating and gas costs will be unbearable. Around one in two homes in Germany is heated with gas. Last year, around 30% of all gas in Germany was consumed by private households. “Many consumers will be shocked when they receive a letter from their energy supplier,” Klaus Müller, chairman of the Federal Network Agency, told Funke-Mediengruppe newspapers. He mentioned a possible tripling of prices.

Udo Sieverding of the North Rhine-Westphalia Consumer Center also cited this figure, saying: “We assume that gas prices could triple compared to pre-crisis levels.” Many suppliers had already raised tariffs for private consumers: from six or seven cents per kilowatt-hour to an average of around 13 cents, and for new customers even to 20 to 25 cents, he said.

And the prices continue to rise. “Prices are already high and we have to prepare for further increases,” said Federal Economics Minister Robert Habeck (Greens).

This will result in an additional annual charge of several hundreds or thousands of euros per household. According to consumer comparator Verivox, an average household with an annual consumption of 20,000 kilowatt hours paid just under €1,200 for gas a year ago. If the price were to double, this would result in an additional annual charge of €2,400. On the other hand, the government’s one-time energy lump sum payment of €300 to private households, with which it wants to offset the cost increase in September, is a joke.

While private consumers at the end of the supply chain will have to bear the full burden of price increases, struggling energy companies will be supported by a multi-billion rescue package. Under the new laws, they will be supported – like banks during the financial crisis and companies like Lufthansa during the pandemic – with generous state loans and equity investments.

The only Düsseldorf-based Uniper group, Germany’s largest gas importer, is currently negotiating a rescue package worth 9 billion euros with the German government.

Uniper is in trouble because gas deliveries from Russia have not materialized. Since mid-June, only 40% of possible volume has passed through the Baltic Sea pipeline Nord Stream 1 because, according to Gazprom, a Siemens turbine that was in operation in Canada fell victim to anti-Russian sanctions. Starting next Monday, the pipeline will be out of service for 10 days and it is doubtful whether it will resume operations after that.

To fulfill its supply contracts, Uniper was forced to buy gas on the spot markets. Prices there have exploded; with speculators making a fortune. On the Dutch TTF exchange, a megawatt hour currently costs more than €170. Previously, long-term contracts were concluded between €20 and €30.

But instead of drying up speculation, the German government is fueling it by providing billions in subsidies to energy companies and enacting new laws to pass the costs on to end consumers. The fight against speculation would require close international coordination. But this is strictly rejected by the governments of the imperialist powers. As they spare no effort to escalate the war against Russia, the speculators’ profits are sacrosanct.

Many working class families are going to freeze this winter simply because they can no longer pay their gas and heating bills. But the new laws also provide for coercive measures to curb the supply of heating. They give the government new powers to prescribe the “conservation and reduction of consumption” of coal, oil and gas by legal decree.

The Suddeutsche Zeitung reports that a housing cooperative in Dippoldiswalde, Saxony, has already announced the rationing of hot water to its tenants. At night, in the morning and in the early evening, water is only available cold. It is “a little taste of the coming winter, the weather for which the government is preparing so feverishly”, comments the newspaper.

Contrary to official propaganda, the current energy crisis is a consequence of government policies. This is the price imposed on the population for intensifying the war against Russia and for Germany to once again become the leading military power in Europe.

Ever since German companies and the government of the Soviet Union signed the natural gas pipeline contract on February 1, 1970, the Soviet Union and later Russia have always reliably supplied the agreed quantities of gas during all economic and political crises. But in recent years this has been increasingly openly sabotaged by the German side in order to expand its own military and economic influence in Eastern Europe.

Today, the flow of gas from Russia threatens to stop completely, with catastrophic economic consequences. Not only would private households and countless small businesses be affected because they can no longer afford energy prices, but there is also the threat of a deep recession.

The president of the Bavarian Chamber of Commerce and Industry, Klaus Josef Lutz, sees entire industries and the national production of basic foodstuffs in danger due to the current “economic war”. “If we don’t have the right gas supply, we may not just be talking about partial unemployment, but also unemployment,” he warned.

Bavarian Prime Minister Markus Söder spoke of the need for “emergency energy and gas measures for our state”. And the Bavarian Business Association predicts German economic output losses of 12.7% if Russian gas supplies are cut off.

But that will not prevent the federal coalition government of the Social Democrats (SPD), Liberal Democrats (FDP) and Greens, nor the opposition Christian Democrats (CDU/CSU) from further stepping up the course of the confrontation against Russia. They all see Russia’s reactionary attack on Ukraine, deliberately provoked by NATO, as a welcome opportunity to put their long-cherished great power and militaristic plans into practice. To this end, they also declare war on the working class in their own country.