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20 May 2022, 13:52
Sören Amelang

Car industry rejects German gas suppliers’ right to hike prices in case of supply shortfall

Der Spiegel

Germany’s car industry rejects government plans to give gas suppliers the right to hike prices immediately in case of supply shortfalls. The proposal is "one-sided" as "gas suppliers could pass on their additional costs in the event of a gas shortage completely onto the population and businesses," Andreas Rade, managing director of car industry lobby group VDA, told news magazine Der Spiegel. He said extra burdens are posing an existential threat to industry, and social upheavals resulting from sharp and sudden price increases must be avoided at all costs. Rade called on the federal government to cushion the additional burdens for industry and consumers “by means of rapid and unbureaucratic compensatory measures” in the event of a gas shortage.

As part of its provisions against a shortfall in Russian gas supplies, the government wants to allow gas suppliers to raise prices within a week in case Germany triggers the second stage of its national gas supply emergency plan, irrespective of existing contracts. The parliament and the council of federal state governments (Bundesrat) greenlighted more measures that apply in case of a gas shortage and includes the right to seize and expropriate critical energy infrastructure from companies.

The government has already launched the first “early warning” stage that focuses on monitoring the situation but this does not yet imply direct state intervention. The second stage, an "alert," would be triggered by a serious disruption to gas supplies, but would still rely on market mechanisms to remedy the situation. It is only in the ultimate "emergency" stage that the state would directly intervene in the gas market to secure supply to "protected customers," such as private households, small businesses and hospitals - possibly at the expense of large industrial consumers. A complete halt to energy trading between Russia and the rest of Europe would likely have grave economic consequences for Germany and other EU countries, analysts have warned.

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