Brake doesn’t help everyone equally
Mid-sized companies grumble that they are disadvantaged by the gas price
By Max Borowski
10/12/2022, 2:48 PM
The brake on the gas price could cost the state nearly 100 billion euros. Despite this gigantic amount, some medium-sized companies with energy-intensive production see their very existence threatened. They mainly complain about unequal treatment compared to large industrial companies.
Rolf Frohwein has already prepared for the worst. The director initiated the end of his company, the traditional porcelain manufacturer Eschenbach. All approximately 100 employees have been informed of their impending layoff. In February, after 130 years porcelain production in Triptis, Thuringia, the energy-guzzling kiln goes out – if the state does not intervene.
“We have electricity and gas consumption of 860,000 euros this year,” says Frohwein ntv. “If we continue to produce, that would rise to more than 4.5 million euros.” This is not acceptable for the medium-sized company. Corresponding price increases for their own products are not possible. But it’s not too late, says Frohwein. But the entrepreneur doubts whether the gas price ceiling, for which the expert committee has now submitted its proposal, is sufficient to reduce energy costs to a level that Eschenbach can bear.
The expert proposal provides for two different reception paths for companies. Craft businesses and other small and medium-sized businesses should be treated on an equal footing with private consumers. In December they receive a monthly payment back and from March the price for 80 percent of their consumption is capped at 12 cents gross per kilowatt hour. For large industrial companies, on the other hand, a gas price ceiling of 7 cents will apply from January – albeit for the net purchase price and only for 70 percent of the demand. Nothing has been decided on this yet. Numerous sectors, associations and companies have reported to the federal government that improvement is needed.
Is this aid package sufficient for energy-intensive companies such as Eschenbach? Twelve cents per kilowatt hour is too much, says Frohwein. Even seven cents would be more than double the previous gas price, on the verge of being bearable. “However, I’m afraid we’ll be classified as small and medium.”
Ask for an emergency fund
Other medium-sized companies also complain about the distinction between large and small producers. “It is extremely unfair that the industry can operate with a cheaper gas price cap,” said Rabea Lehfeldt ntv. Artisan bakeries compete directly with industrial manufacturers who sell their products in supermarkets. The competitive advantage of the big ones is further enhanced by the fact that the price cap should apply to them from January, but only two months later for craft businesses.
Economist Clemens Fuest, head of the Ifo Institute in Munich, is aware of the entrepreneurs’ objections. “Mid-sized companies will have a lot of extra workload,” says Fuest ntv. This is “unsatisfactory” for the individual. But the state cannot bear the full additional costs. In addition, the gas price brake with its general regulations does not help all companies to the same extent. “Some will be able to carry this extra burden, but others will not,” Fuest said. Business associations also see it that way and are therefore calling for an emergency fund for companies threatened with bankruptcy as part of the aid package.
Fuest also emphasizes the need to receive a “saving incentive”, therefore the price for the entire energy requirement should in no case be capped. Given that as things stand, Germany is likely to have about 20 percent less gas available this winter than in previous years, politicians and representatives of the committee of experts have repeatedly pointed to the need to force gas consumers to save through the price.
However, for many energy-intensive medium-sized companies or artisans, this idea is unrealistic. “We can’t just bake our bread half-baked,” says Lehfeldt, who runs the bakery. For Eschenbach, too, shutting down production is currently the only way to significantly save gas, says Frohwein. Alternative energy sources such as hydrogen will probably not be available in sufficient quantities for another 10 to 15 years.