In recent months, prices on the energy exchanges have broken one record after another. This has had an impact on Stadtwerke Gießen's energy prices.
Since January 2021, exchange prices for natural gas and electricity have multiplied. This development naturally influences the prices of Stadtwerke Gießen (SWG). This does not necessarily mean that the end prices for customers will also rise. This is because the significant reduction in the EEG levy from 6.5 to 3.723 cents per kilowatt hour offsets the cost increase on the procurement side. "As usual, we are passing on the benefits resulting from the reduction in the surcharge to our customers one-to-one," explains Jens Schmidt, Commercial Director at SWG. "However, this will not lead to lower electricity prices this year. Rather, we will be able to prevent them from rising." This applies to all tariff models for SWG's private and commercial customers.
Unfortunately, there is no such price-dampening effect for natural gas prices. As a result, the historically high procurement costs are reflected in the end prices. "We simply cannot avoid adjusting our gas prices significantly upwards," Jens Schmidt summarises. In fact, the prices in the basic supply for an average household with a consumption of around 27,000 kilowatt hours are rising by around 24 per cent per year. Although this is a massive increase in itself, it is very moderate compared to the competition. This is because many suppliers - especially those who have placed great importance on occupying one of the top positions in the relevant portals - have to raise their prices significantly more. Doubling is not uncommon, and some have more than tripled their prices.
The reason for the comparatively small increase at SWG lies in its procurement strategy. "We stock up on partial quantities at different times," says Jens Schmidt, explaining the concept. In this way, the experts at SWG reduce price risks arising from fluctuating prices on the stock exchange. In return, they accept that they do not always procure at the very best conditions. "With our strategy, we can never be the cheapest. But we offer maximum security," says Jens Schmidt, describing the situation. Especially in the current situation, this aspect refers not only to reasonable, easily calculable prices, but also to the supply itself. This is because the first suppliers to adopt a much riskier procurement strategy have already had to file for insolvency or have stopped supplying. "Something like that can't happen with a comparatively conservative municipal utility like us," assures Jens Schmidt.
However, SWG is not just a reliable supplier for its existing customers. In fact, the company automatically supplies natural gas to anyone in its traditional supply area whose supplier becomes insolvent. Or people whose supplier cancels their contract of their own accord. Jens Schmidt puts it like this. "We are simply a safe harbour - for our customers and for anyone who is let down by their supplier for whatever reason."
Speaking of security: For customers who have opted for a Thermofix product - i.e. a fixed-price tariff from SWG - everything will remain the same for the time being. SWG has procured the necessary quantities of gas at fixed conditions. However, no one can yet reliably estimate when SWG will be able to make a similarly favourable offer again. "We are monitoring the market meticulously and are working feverishly to be able to launch new Thermofix tariffs soon," promises Jens Schmidt.
Concrete figures
What exactly are the gas price increases? The energy prices in the basic supply will rise by 1.62 cents per kilowatt hour gross in all five tariff levels from January 2022. There will also be a slightly higher basic price for the heating tariffs. In tiers 1 and 2, this will be two euros higher gross per year than before. In level 3, the basic price will increase by five euros per year gross.
Adjust the costs yourself
For the average household described above, these figures result in additional costs of a good 37 euros per month. However, if you know how, you can reduce these additional costs to a certain extent. The energy advisors at SWG will tell you what is possible. "Take us at our word and take advantage of this offer," recommends Jens Schmidt. In fact, the experts at SWG know all sorts of tricks that can be used to reduce heating energy consumption without sacrificing comfort. The relevant appointments can be easily booked online: www.energiessen.de/online-terminvergabe
Why prices are climbing across the board
There are numerous reasons for the rapid rise in energy prices on the stock exchange. "Many unfavourable factors have come together this autumn," explains Olaf Volkmer, SWG's expert for the energy markets. Probably the central one: the global economy is regaining momentum after the coronavirus lockdown. With the direct consequence that energy demand is rising. Companies in Asia and South America in particular are currently demanding huge quantities of natural gas. They are also prepared to pay extremely high prices for it. This combination is leading to a shortage of supply in Europe. Exporters who are not bound by contracts naturally prefer to deliver to places where they can earn more.
The coronavirus also plays a decisive role in the second factor: some operators of production platforms or pipelines that serve the European market have suspended maintenance work due to the pandemic and are now catching up on the important work. As a result, production and transport capacities are temporarily unavailable. And this further reduces the available supply of natural gas.
Factor 3 - the weather. It is a truism that it has a massive impact on natural gas consumption. However, it is now not only cold temperatures that cause demand to rise, but also hot spells. And not just locally in Germany, but also globally. These correlations have been observed in Europe in recent months: A long and cold winter was followed by a rather cool summer in our latitudes. Southern Europe, on the other hand, suffered from a heatwave. Both phenomena accumulated in one problem: currently empty gas storage facilities. The fact that they were only slightly full in spring is completely normal. After all, they serve the purpose of cushioning weather-related demand peaks in winter at low cost. However, the summer did not go according to plan. The operators of the storage facilities usually use this period to replenish their stocks. This was largely cancelled this year. Because large quantities of natural gas were needed in the heat-stricken countries to produce additional electricity for sufficient air conditioning, there was a shortage for storage.
In addition, the geopolitical situation and in particular the dispute over the Nordstream 2 Baltic Sea pipeline are likely to have played a significant role in the current price trend. And last but not least, German politics is also making a contribution: keywordCO2 price. Introduced in January of this year, it will rise from 0.541 to around 0.649 cents per kilowatt hour gross in 2022, making the fuel even more expensive.
"Every single point would be annoying under the conditions we have known so far. But no more than that," says Jens Schmidt. Because all these individual phenomena alone would only result in a moderate price increase - if at all. It is the combination of all these unfavourable factors that is causing the current price explosion. It is impossible to predict when the situation will normalise again. "Although the market is calming down again somewhat, I think it is far too early to speak of the all-clear," Olaf Volkmer points out.
In addition to the suggestion to consult the SWG energy counselling service, Jens Schmidt recommends that all customers check their natural gas discounts and adjust them if necessary. This won't save any money, but it will prevent nasty surprises and high additional payments. After all, it is foreseeable that the next natural gas bill will be higher than the last one in the vast majority of cases.