First local utilities in Germany struggle due to high power and gas prices – media

Some local utilities in Germany are seeking state support due to the high power and gas prices, thereby following leading gas importer Uniper’s request for a bail-out, reports business daily Handelsblatt. Many utilities purchase their energy on a long-term basis and have hedged their prices, but the companies also procure a share of electricity and gas for their customers via short-term trading, which currently incurs very high prices. As customer contracts are often subject to fixed prices, suppliers cannot fully pass on the higher costs and are now facing liquidity problems. Smaller suppliers, such as E-Optimum or Kehag, as well as the municipal utilities including Bad Säckingen, Bad Belzig and, most recently of major eastern city Leipzig, have announced they face difficulties. Industry sources told the newspaper that other utilities also grapple with liquidity problems.

Gas flows from Russia have gradually diminished since the country attacked its neighbour Ukraine in February and were cut almost entirely at the beginning of September, which has driven up prices. The German government has helped large importers such as Uniper with state support, and is introducing a gas levy from 1 October that will be added on top of gas customers’ bills and used to help struggling importers weather the price crisis. However, only importers are eligible and not that regular local utilities who buy supplies from those importers. Local utility association VKU has called for a support scheme for its members.