German firm calls for energy price cap to avoid social unrest

2 minute read

Pipes are pictured at a gas compressor station in Mallnow, Germany, November 1, 2021. REUTERS/Hannibal Hanschke//File Photo

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BERLIN, July 14 (Reuters) - Household energy costs could triple in Germany as Russian gas supplies dwindle, officials in the sector said, and one company representative raised the possibility of social unrest unless there was a cap on prices.

In an interview with the RND newspaper group published on Thursday, Klaus Mueller, head of the Federal Network Agency regulator urged consumers to reduce consumption and set aside money.

And in an interview with Reuters, the head of the municipal works of Chemnitz, one of the 900 city-owned public companies that are a major part of Germany's energy landscape, went further.

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"We must help average households and set an upper limit for energy costs," Roland Warner said, warning that annual bills of 1,500 euros could rise to 4,700 euros in October. "If we get social unrest the state won't be able to cope."

The energy ministry did not immediately respond to a request for comment sent after working hours.

Energy minister Robert Habeck has in the past rejected calls for state price caps, saying the state cannot fully offset increased prices and that attempting to do so would send the wrong signal about the need to conserve energy.

After prospering from cheap Russian gas for decades, Europe's largest economy is facing a crunch as Russia dials back supplies.

Western governments say Moscow is retaliating against sanctions imposed over its invasion of Ukraine, but Moscow blames technical problems.

Some analysts warn that public backing for a tough line against Moscow could weaken further if living standards decline.

A Forsa poll published on Wednesday found that support for a boycott of Russian gas - a major source of finance for what Moscow calls its "special operation" in Ukraine - had fallen from 44% of respondents six weeks ago to just 32% now.

With spot prices soaring, Mueller warned that end-consumers rolling over their fixed-term contracts now would find themselves paying twice as much now, and three times at the end of the summer.

"Some prices on exchanges are up sevenfold," said Mueller. "It's not all going to come through immediately, and won't be fully passed on, but it's going to have to be paid eventually," he said.

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Writing by Thomas Escritt; editing by Philippa Fletcher

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