The federal government is preparing the energy industry behind the scenes that the second of three shortage levels of the gas emergency plan could be declared within a few days. However, the final decision is apparently still pending. This would have serious effects on the gas market:
The amendment to the Energy Security Act (EnSiG) recently passed by the Bundestag allows very rapid price increases up to the current market level in the event of an “alarm level” – while disregarding existing contracts (Background reported).
In addition to the declaration of the second stage, the legal requirement is that the Federal Network Agency determine significant reductions in import volumes. This situation actually happened.
The resulting right to pass on high prices almost immediately affects contracts with retailers, industry, commerce and private consumers alike. Many customers, but also intermediaries, are somewhat protected by long-term contracts and periods of notice and are currently confronted with the high price level only gradually and with a considerable delay.
The newspaper “Welt” reported yesterday evening that, according to the federal government, the industry should “assume” that the alarm level will be declared soon. With this announcement, State Secretary for Economic Affairs Patrick Graichen addressed the 55 members of the board of the Federal Association of Energy and Water Industries (BDEW).
The association said that committee meetings are generally not open to the public: “The BDEW therefore does not provide information about the course and content of such meetings and does not comment on speculation in this regard.” . We make decisions based on these specifications and do not speculate about them.”
Several people from government circles confirmed the “world” representation in an interview with Tagesspiegel Background in the evening. The declaration of the alert level is actually being considered very seriously. A source stressed that, to their knowledge, a final decision had not yet been made. Another person, on the other hand, emphasized that there are many things pointing in the direction of tightening. The “Welt” wrote that Graichen had argued that the suppliers should prepare for the alarm level to be declared within five to ten days.
The situation on the gas market has been even more tense than before since the Russian gas flow was curtailed last week. Gazprom had given technical reasons and sanctions for the lower deliveries through Nord Stream 1, but the federal government considers this explanation to be a pretense. The Federal Network Agency’s situation report yesterday showed that deliveries to Germany continued to fall drastically.
The BMWK can declare the alarm level on its own and is based on a catalog of criteria that cannot be precisely objectified. One of the points mentioned: A “high risk of long-term undersupply”. The fact that the situation on the trading venues has not escalated dramatically speaks against the declaration of the alert level. Gas for delivery in July cost 126 euros per megawatt hour in the Netherlands (TTF) last night.
That’s almost 50 euros more than a week ago, but at the beginning of March well over 200 euros had to be paid at times. The winter contracts are currently cheaper than the July delivery, so the markets are not anticipating any escalation in the cold spell.
Level one of the emergency plan (“early warning level”) was activated at the end of March and primarily leads to a more precise monitoring of the situation. Stage two provides for even more stringent monitoring, also by the network operators, and coordination with the European Commission.
More important: the long-distance gas pipeline operators intervene with a number of measures. The network is to be used as a buffer to compensate for fluctuations. The transport capacities should also be optimized in a targeted manner and external control energy can be requested. By far the most drastic measure – the rapid passing on of high prices according to EnSiG – has only recently been associated with this stage, as mentioned.