Reuters reported on Friday, citing an unnamed source, that Germany is considering extending price caps on gas and electricity until the end of the coming winter in March 2024.
Last year, to protect businesses and consumers from the impact of rising energy prices, Germany introduced a 200 billion euro package for a so-called “defensive shield”. In late September 2022, the German government said it would scrap earlier plans for a gas levy on consumers. Instead, it will introduce a gas price cap to curb rising energy bills.
The package has helped with the soaring energy costs at the start of last winter, when Germany lost all Russian gas pipeline supplies via Nord Stream and energy commodity markets were highly volatile following Russia’s invasion of Ukraine.
Now, according to Reuters’ source, the government plans to extend price caps on gas and electricity, and the European Commission is reviewing the measure. But Germany wants to end the VAT cut on district heating and gas due to more stable energy prices and a tighter budget, the source said.
Earlier this week, the chief executive of the country’s largest utility, RWE, told German publication WirtschaftsWoche that gas supply disruptions remain a risk for Germany.
“We don’t have any buffer in the gas system,” RWE CEO Markus Krebber told WirtschaftsWoche, adding that Europe’s largest economy needs to speed up the construction of gas import infrastructure to avoid future shortages.
“If there is a very cold winter or supply disruptions, this can lead to very critical situations – and as a result to shortages and significantly higher prices,” the RWE chief said.
Krebber’s warning that Germany and Europe are not out of the woods yet echoes similar sentiments from German industry.
The country continues to urge consumers to conserve gas and expects gas prices to remain high until at least 2027.