Hebek and the Association of Cities are concerned about the public utilities in the gas crisis
In view of the gas crisis and rising energy prices, cities are increasingly concerned that municipal utilities will run into serious economic difficulties – and that security of supply will be at risk.
Photo: Patrick Pleul/DPA
What would happen if Putin cut off the gas to Germany? The scenarios that the Economics Minister is preparing are sometimes harsh.
Berlin. In view of the gas crisis and rising energy prices, cities are increasingly concerned that municipal utilities will run into serious economic difficulties – and that security of supply will be jeopardized. “The pressure on the municipal utilities is increasing every day,” said Helmut Dedi, general manager of the German press agency Deutscher Städtetag. If the public utilities were to pass on the sharply rising prices, many families would be overwhelmed with the costs. If they don’t pass it, many public utility companies face bankruptcy, he warned. “The supply of many households will no longer be safe.”
Federal Economics Minister Robert Habeck also warned of a “price explosion” for gas. He was referring to a possible total blackout of Russia’s gas supplies. Russia invaded Ukraine at the end of February and has been at odds with EU states that support the government in Kyiv ever since.
Annual maintenance work on the Nord Stream 1 pipeline, which usually lasts ten days, begins on July 11. Then no gas flows through the line. The big concern is that Russia won’t turn on the gas tap again after the maintenance. Nord Stream 1 gas flow is already at just 40 percent of maximum capacity.
Federal Network Agency warns of rising gas prices
The Federal Network Agency warns on its website: “Companies and private consumers should be prepared for a significant increase in gas prices.” It is important to save as much gas as possible.
Deddy called on the federal and state governments to prevent municipal utilities from getting into serious trouble. “Otherwise the security of supply in Germany would be endangered.” These are predominantly municipal facilities from which many households obtain gas and electricity, water or heat. The pressure to act increases every day.
The federal government must immediately place municipal suppliers under the protective umbrella for companies. He also called for the affected municipal utilities to be granted liquidity support in the form of guarantees and loans as soon as possible. In his opinion, an insolvency moratorium should also be introduced in the short term to suspend the obligation to file for insolvency.
Transport companies, municipal hospitals, schools, bathhouses and other public facilities will also feel the effects of the energy crisis. Deddy also called for an honest debate: “We have to talk about this: what can we do without and what is needed on site? It’s street lighting and traffic light switching, hot water in public buildings, museums.” And it’s about fans or air conditioning in sports halls and schools. »
Habeck: The quasi-economic war dispute
In order to be able to assess the risk of a gas shortage, one must be able to see the head of Russian President Vladimir Putin, Habek said on Saturday evening at an event organized by the weekly newspaper “Die Zeit” in Hamburg. “But you’re seeing a pattern, and it can lead to this scenario.” You’re dealing with a “quasi-economic war dispute.”
Habeck said the Russian calculations were intended to “destroy the country’s unity and cohesion” in order to keep prices high in Germany. He referred to the beginning of the steps from stopping gas supplies to Poland and Bulgaria to the current situation.
Germany is trying to counteract this with energy-saving campaigns and the use of coal. Logically, the next step could follow the previous reduction in Russian gas.
Minister sees two options
Regarding suppliers like Unipar, Germany’s largest gas importer, who got into trouble, Habeck said: Companies that have imported a lot of Russian gas “have a real problem”. For example, they have to fulfill their supply contracts with municipal utilities, but buy more expensive gas elsewhere.
There are two options: Either the state supports companies with tax money. “Or you allow the companies to pass on the prices.” That is what the Energy Security Act provides for, which introduced so-called car-free Sundays in the 1970s. Discussions were being held about necessary changes in the law.
A clause that would allow companies to pass on prices outside of the contract has not yet been activated. Because it is “a very, very sharp sword.” The company’s customers will then immediately receive the full price adjustment. The government is still working on other options “that cannot drive the nail into society so quickly”.
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