Germany increases contested gas surcharge

6 months ago 20

A controversial gas transit surcharge levied by Germany will be increased again from July, the German operator announced on Tuesday (21 May), adding to tensions with Austria and Brussels.

In the summer of 2022, when Russia stopped supplying gas to Germany, the government authorised large-scale purchases to ensure storage facilities were well-filled before winter. When gas prices dropped, market operator Trading Hub Europe (THE) levied a surcharge on gas flows to recoup the cost.

As of July, the charge will be increased by another 34% to €2.50 per MWh, THE announced on Tuesday. The announcement comes amid a prolonged three-way stand-off between Vienna, Berlin and Brussels.

Austria, supported by countries like Poland, Hungary and Czechia, says the surcharge obstructs their move away from Russian gas as non-Russian gas imported through Western European LNG terminals becomes more costly due to the added German transit fee.

Vienna says the fee violates the EU’s free movement of goods rule. Asked by an EU lawmaker, the Commission said it is “carefully monitoring the situation in the EU and is in contact with German authorities regarding the legality of the gas storage fee”.

The German government has insisted in the past that the storage fee is in line with EU rules and contributes to the stability of the European gas market – by financing annual storage obligations.

“We are continuing to hold intensive talks with the Commission and the member states on this issue,” a spokesperson for the German Ministry of Economy and Climate Action told Euractiv.

Trading Hub Europe, which runs the German market and is tasked with levying the charge and keeping gas storages full, explained the surge in the context of a rapid drop in gas prices.

“In 2022, THE purchased some 50 TWh of gas at an average price of approx. 175 EUR/MWh for injection into storage,” THE recounted, adding that while they managed to sell a quarter of the gas at 50% of the purchase price, the remaining volume had to be sold at less than a third of the purchasing price.

Among experts and industry associations, the charge is rather unpopular.

“The European Commission should now get into gear and put its foot down,” said Christoph Dolna-Gruber, an expert from Austria, adding that the charge had triggered a downward spiral: Less gas flows through Germany in response to the charge, resulting in higher charges to recoup the massive gas trading losses.

Power industry association Eurelectric, for its part, said the charge violates the EU’S free trade principles.