"Up to 1.32 Million Won Per Household Increase"... Germany's 'Explosive Price Hike' as Russia Shuts Off Gas Pipeline

German Government Allows Gas Price Increase Pass-Through to Consumers Starting October

German Gas Compression Facility
[Photo by Yonhap News]

[Asia Economy Intern Reporter Kim Nayeon] As Russia shut off the gas pipeline to Europe for maintenance work, German households are facing an annual gas bill increase of up to 1,000 euros (about 1.32 million won).

As Russia drastically reduced gas supplies and gas prices soared, the German government allowed energy companies from October to pass on the market price increases to gas consumers such as households and businesses.

According to major foreign media, the German government unveiled a draft bill on additional gas charges starting October 1. This will be imposed temporarily until September 2024.

Robert Habeck, Germany’s Vice Chancellor and Minister for Economic Affairs and Climate Protection, stated, "Germany is facing the largest energy crisis in history," adding, "Economically vulnerable households will be offset with increased welfare support."

Under the additional gas charge plan, households will bear an extra 1.5 to 5 cents (about 20 to 66 won) per kilowatt-hour (kWh). Assuming a monthly consumption of 20,000 kWh, a family of four is estimated to pay an additional 300 to 1,000 euros (about 400,000 to 1.32 million won) per month.

With the possibility of passing on the price increases to consumers, Germany’s largest energy company Uniper, which was on the brink of bankruptcy due to price hikes caused by Russia’s supply cuts, is expected to get some relief.

Last week, Uniper secured emergency bailout financing worth 15 billion euros (about 20 trillion won) from the German government. Since then, Uniper’s stock price plummeted more than 30%, hitting an all-time low.

Since Russia’s invasion of Ukraine in February, it has reduced natural gas supplies to Europe as retaliation against sanctions imposed on it. Germany is the largest consumer of Russian natural gas.

Russia’s state-owned gas company Gazprom recently halted natural gas supplies to Europe via Nord Stream 1 for ten days starting on the 11th for equipment inspection, resumed at 40% of usual capacity on the 21st, and then reduced again to 20% on the 27th.

As natural gas supplies from Russia decreased, Germany raised its gas emergency supply plan alert from level 1 to level 2 on the 23rd of last month.

Meanwhile, the German government has urged households and businesses to participate in energy saving efforts to raise the current natural gas storage rate of 67.2% to 95% by November in preparation for worse scenarios.

This content was produced with the assistance of AI translation services.