Message from 06/18/2022
Written by Catherine Behner
So far, the price hike has not reached many Stadtwerke Knowledge customers. Because many of them have built a fixed price guarantee into their contract with Erdas. But how is the overall development going and what about the reliable supply of municipal utility customers?
knowledge. In an exclusive interview with AK-Kurier, Stadtwerke Wissen’s Managing Director Dirk Baier answered questions on the minds of more and more consumers, for example: How do rising energy prices affect Stadtwerke Wissens customers? Are customers’ gas needs guaranteed? What will happen after the EEG surcharges are cancelled? Will Stadtwerke customers continue to be well supplied after reduced gas supplies via Nord Stream 1?
Mr. Bayer, you check prices on the global gas market every day and buy at the cheapest possible price. What are the current gas prices in the global market?
After gas prices actually rose to 7 cents per kilowatt in February, we are currently at 14 cents for purchases in 2022. For 2023, the price is currently around 11 cents. But prices are going up here, too. If you think we were still at 2 cents at the beginning of 2021, that’s a huge price increase.
How secure are the Stadtwerke Wissens customers’ needs in the coming period?
For 2023, we have already been able to purchase 83 percent of our natural gas needs. For 2024, about 51 percent. We buy in such a way that we get the best daily prices if possible, while we should not lose sight of the current global situation. The supply situation is tense, and natural gas storage facilities in Germany are 55 percent full so far.
55 percent of full natural gas storage now looks very low in June. Are you sure that in view of recent developments, it is still possible to cover the entire demand?
The current storage level of about 55 percent at this time of year is normal. The new gas storage law states that 80 percent of storage tanks must be filled by October and 90 percent by November. Certainly, these requirements could have been met if the Nord Stream 1 gas pipeline had been fully used and there had been high deliveries of LNG from, say, the United States and Qatar. Unfortunately, the supply situation has now deteriorated dramatically due to a 40 percent drop in deliveries via Nord Stream 1 and damage to the most important large-scale LNG production plant in the United States due to an explosion and subsequent fire. If gas shipments through Nord Stream 1 continue to be reduced, it will not be possible to achieve the minimum storage levels stipulated in the Gas Storage Act by October or November. I do not even want to think about the complete cessation of deliveries by Russia.
As I mentioned before, Gazprom has reduced gas supplies to Germany several times over the past few days. Currently, 60 percent less gas flows to us through Nord Stream 1. Other countries such as the Czech Republic, Slovakia and Austria have also reported only low gas arrivals. In your opinion, could that lead us to gas level 2 in the contingency plan? What does that mean specifically for your end users and the industry in general?
It is currently unclear if and when other phases of the gas contingency plan will be called up. One can only speculate about this. We are now in the first stage of what is called the early warning stage. At this point, the crisis management team meets at the Federal Ministry of Economy, which regularly monitors and assesses the situation for the Federal Government. But at this stage, the state does not interfere in the market. In the second stage of the warning stage, suppliers still take care of mitigating the situation themselves. This is done, for example, using gas storage facilities or purchasing natural gas from alternative sources.
In the third stage of the emergency level, there is an exceptionally high demand for gas, a significant disruption of the gas supply or other significant deterioration in the supply situation. Then the state intervenes in the market. In plain language, this means that the Federal Network Agency will be given the power to determine who will continue to receive gas. It acts as a load distributor. Our valued customers, including German families, have priority. The industry will first be shut out of the gas tap. Exactly which companies will be cut off from gas is just speculation.
Stadtwerke has offered its existing customers a product at a fixed price for two years. For customers who have accepted this product, one can say: lucky. For customers with basic service and customers with tariffs based on this tariff, a price increase is expected from August. why is that? Are municipal facilities still within the limits?
The reason for the increase is the significant increase in procurement costs due to the Ukraine war. So we should raise tariffs for primary and reserve supply by 5.2 cents per kilowatt-hour (gross) as of August 1. However, it must be emphasized that Stadtwerke offers a product with its Siegtalgas tariff which is more than competitive compared to the competitive tariffs.
Regarding our fixed-price product, I must refer to the new Energy Security Act. This law states that in the event of a gas shortage, the costs arising from this can be transferred by our prior supplier to Stadtwerke Wissens GmbH. Public utilities can also transfer excess costs with advance notice. Like I said, this is a legal option. It would also be conceivable that the state would bear the additional costs directly from the previous supplier. No one can currently predict what will actually happen in the end and it is just speculation. As a fair regional supplier, Stadtwerke Wissens GmbH will pass on to its customers only costs established by law and over which we have no influence.
Robert Habeck, the Minister for Economics and Climate Protection, recently asked residents to save energy with guidelines. How do you see that?
I see it the same way Secretary Habeck sees it. There are many ways to save energy effectively. However, I think some people have already dealt with it and become more sensitive. Thus, gas consumption decreased this year compared to last year. However, this may also be due to higher temperatures this year. But when it comes to electricity alone, consumers can save about 115 euros a year in a three-person home by turning off the standby mode. There are many small starting points that together mean a big step in the right direction.
Where are we with electricity: As of July 1, the EEG tax, also known as the electricity cost tax, will not apply. He has served to finance the promotion of expansion of solar, wind, biomass and hydropower plants, and has previously been collected from end customers via their electricity bills. How do public utilities deal with the loss?
We highly welcome the abolition of the tax and the passing of 4.43 cents per kilowatt-hour (gross) 1:1 savings to our customers. This means that at least part of the huge increase in energy costs for our customers can be offset.
Our customers don’t have to worry about anything in order to take advantage of the discount. Consumption is determined automatically. Meter readings do not have to be sent.
How can you offer biogas for cars cheaply in the current situation? Compared to diesel and petrol prices, there is hardly a cheaper alternative besides electric mobility.
We get our biogas from different biogas plants all over Germany. Biogas or biomethane is obtained from biological materials (such as corn, liquid manure or organic waste) in biogas plants through fermentation. Therefore it is not a fossil fuel, and therefore a 100% climate-neutral alternative to natural gas. Our bio-natural gas was purchased before the Ukraine crisis. For this reason, we can offer our customers this attractive offer of 95 cents per kilogram of Bio-Natural Gas. Compared to diesel, the converted price per liter is currently about 72.5 cents. In terms of energy content, one kilogram of natural gas is equivalent to 1.31 liters of diesel.
However, gas powered engines are among the combustion engines and should not be on Germany’s roads as of 2035. Is it still worth buying a gas powered car?
In my view, there is currently no cheaper alternative, which has been repeatedly emphasized by ADAC in its current comparisons. In my view, it is also pointless to ban vehicles that run on bio-natural gas (100% neutral).
How do you see the expansion of renewable energies?
On this topic, I think the expansion of renewable energies, such as wind or energy to gas, is progressing very slowly. In the future we should become more independent from third countries, for example when it comes to using raw materials as political tools around the world.
Thank you for this interview.
(Taken by Katharina Behner)
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