19 Oct 2022, 13:39
Carolina Kyllmann

Local utilities call on German govt for support as “situation continues to worsen”

Clean Energy Wire

A broad alliance of German regional and municipal energy suppliers has jointly called for a protective shield against soaring energy prices and requested a special conference of federal and state finance ministers, claiming the “situation continues to worsen” for many of them. “If local energy suppliers get into existential difficulties, it would create a threatening chain reaction and the failure of system-relevant structures for the entire municipality,” the energy industry groups said in a joint statement. The associations appeal for loans and guarantees from state development banks, stabilisation of energy trading, debt support and insolvency legislation. Energy suppliers see themselves less and less in a position to ensure the longer-term commercial activity in view of the current enormous price development in the energy markets, according to the press release. “The current situation on the energy market is leading to major problems for energy suppliers,” the statement jointly released by local utility association VKU, energy industry association BDEW and the German Association of Cities and the German Association of Towns and Municipalities reads.

Skyrocketing gas and electricity prices have come as a result of significant delivery reductions of Russian fossil energy imports into Europe following the country’s attack on Ukraine. As long-term contracts often prohibit energy companies to pass on higher costs to customers, many gas importers have been faced with severe liquidity shortages, leading amongst other things to the nationalisation of Germany’s biggest gas importer, Uniper. To protect households and businesses, the German government has adopted three relief packages with a combined worth of around 95 billion euros. Additionally, a 200-billion-euro ‘defence shield’ to lower gas prices was agreed on in late September.

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