Amendment of the law.  the government wants to create a "protective shield" for energy companiesWorld News 

Amendment of the law. the government wants to create a “protective shield” for energy companies

change in law
The government wants to create a “protective shield” for energy companies

The Nord Stream 1 Baltic Sea pipeline, through which Russian natural gas has been flowing to Germany since 2011, ends in Lubmin near Greifswald. Photo: Stefan Sauer/dpa

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The federal government could pour billions in taxpayer money into energy companies to bail them out. Its legal basis can be created soon.

In the face of the gas crisis, the federal government wants to create a “protective shield” for ailing energy companies.

The legal changes are designed to create the conditions for the federal government to invest in companies like Uniper. Amid the coronavirus crisis, the federal government backed Lufthansa with billions of dollars and took a stake in the group.

The Ministries of Economy, Finance and the Federal Chancellery have agreed in principle on the project, as government sources said on Monday. It was first reported by “Spiegel”.

The German Press Agency also had access to a draft amendment to the Energy Security Act. This regulates financial assistance for the acquisition of shares in the company so that the bankruptcy of the gas supplier can be prevented.

expand maneuvering space

According to the coalition, the goal is to expand the federal government’s scope of action. The agreement of the traffic light groups is expected on Tuesday. The circles said price spikes for gas customers should be prevented with stabilization measures for companies like Uniper, likely to run into billions.

The draft says stabilization measures for “critical infrastructure companies” should be facilitated by the federal government to ensure security of supply, targeting energy suppliers. Such measures will only be considered if requested by the relevant company.

Russia has severely cut Nord Stream 1 supplies through the Baltic Sea. As a result, Germany’s largest importer of Russian natural gas, Uniper, faced turbulence and called for state aid. As Uniper stated, a number of instruments are possible for this, such as guarantees and securities payments through equity investments. That means the state will mess with Uniper.

Talks about stabilization measures

The federal government had confirmed that it would talk to Uniper about stabilization measures. According to the spokesperson, the Ministry of Economy is working on solutions “under high pressure”. A spokesman for Economy Minister Robert Habeck (Greens) said the aim was to prepare for continued stress in energy markets and fill the toolbox. Energy markets must remain active. The spokesman noted that Uniper has not yet drawn down an existing credit line of 2 billion euros from KfW state bank.

As a major gas importer, Uniper plays a central role in Germany’s energy supply and supplies many utilities. However, Uniper is currently unable to pass on the additional costs of gas intake to customers. the company had stated that this would result in a significant financial burden.

Now the state can provide financial support to Uniper. This was mentioned as the first option in the coalition circles. Another possibility would be that gas customers would pay a price increase, but this could lead to a sharp rise in consumer prices.

Right to adjust prices for utilities

The current Energy Security Act allows utilities to “regulate rates.” To do this, the Federal Network Agency would have to officially decide on a “substantial reduction in the total volume of gas imports to Germany”, which has not yet happened. If the mechanism is activated, suppliers can pass on their current additional costs to their customers in a short period of time and lead to large price jumps.

Habek warned about a possible “explosion of prices” in some public services. In order to distribute price jumps more fairly among consumers, the federal government is therefore working on a toll system. This means that loads could be more evenly distributed among all consumers, as said.

Gas supply is currently stable

Problems for energy companies could be compounded as Nord Stream 1’s annual maintenance work, which normally lasts 10 days, begins on July 11. Then gas does not flow through the pipeline. The big concern is that Russia will not open the gas tap again after the maintenance. Habek and the Federal Grid Agency had warned of such a complete disruption of Russian gas supplies by Nord Stream.

The Federal Grid Agency wrote in its management report on Monday that the gas supply in Germany is currently stable. Security of supply in Germany is still guaranteed.
Gas storage will continue. Thus, the current storage rate in Germany is 61.85 percent. The federal government’s primary goal is to have storage tanks nearly full by the start of the fall heating season.

In order to become less dependent on Russian gas, given the Russian war of aggression in Ukraine and a possible supply failure, gas consumption will also decrease, especially in industry. It also needs more coal-fired power plants.

In addition, more liquefied natural gas (LNG) must be imported from other countries. Floating terminals are initially planned for this purpose. According to Uniper, the State Trade Control Office in Oldenburg on Monday gave the green light for the early start of construction of Germany’s first liquefied natural gas terminal in Wilhelmshaven. Up to 7.5 billion cubic meters of natural gas per year is to be transported through the floating LNG terminal. That corresponds to about 8.5 percent of Germany’s current annual gas demand, it said. The goal is to put it into operation next winter.


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