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Gas procurement levy – risks for balancing group managers29 July 2022

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"The market area manager is entitled to claim reimbursement of the gas procurement levy from balancing group managers."

Yesterday, the first draft version of the new German regulation on the introduction of a gas procurement levy based on § 26 Energy Security Act (“EnSiG”) was published. Unfortunately, the regulation insufficiently addresses the problems associated with the introduction of a gas procurement levy and raises enormous operational difficulties for market participants, in particular balancing group managers. The core problem is that only the relationships between gas importers and market area managers, and between market area managers and balancing group managers are regulated.

The draft regulation entitles gas importers to make a compensation claim against the market area manager (Trading Hub Europe GmbH) to absorb the costs of replacement procurement for lost gas import volumes. The market area manager in turn is entitled to claim reimbursement of the gas procurement levy from balancing group managers. The draft regulation regulates these legal relationships comprehensively and very precisely.

Unfortunately, however, it contains neither an explicit right nor an obligation for balancing group managers to pass on the costs of the gas procurement levy to end customers. In light of this, it is essentially down to chance as to whether there are contractual provisions allowing said costs to be passed on.

"The balancing group managers bear the risk that they are debtors of the new gas procurement levy without any possibility to pass it on to end customers or holders of sub-balance groups."

This also leaves it to chance whether end customers may be burdened with the levy (as the government likely intended) or not. From the point of view of balancing group managers, it is therefore advisable to check all contracts at short notice to see if contractual rights to pass on such a new levy exist and, if not, to make corresponding contractual amendments where possible to enable this. Otherwise, the balancing group managers bear the risk that they are debtors of the new gas procurement levy without any possibility to pass it on to end customers or holders of sub-balance groups.

A further weakness of the draft regulation lies in § 2 Paragraph 8., which requires that gas importers do not set the budget billing value for the following month until the 15th of a month. Even if a balancing group manager has a contractual right of pass-on the levy, this presents the balancing group managers with the operational and financial risk (costs for paper, printing and postage) of both communicating these price adjustments to end customers in good time and implementing them. A further difficulty is that postal service providers are unlikely to be able to deliver the volume of letters reliably and on time.

It is therefore urgent for balancing group managers to take action. WFW will be happy to assist in this regard.

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