German Gas Regulator Calls for Household Consumption Cut; EU Eyes Replacing TTF

By Geoffrey Smith — Germany’s top energy regulator warned that households need to cut their gas consumption by at least 20% to avoid rationing at some stage during the coming winter, after the first blast of cold weather led to a sharp rise in demand over the last week. 

Bundesnetzagentur said that demand last week, at 483 gigawatt-hours had surged some 15% above the average level over the previous four years, indicating that prior warnings of the need to save gas had not yet been taken on board by households in Europe’s largest economy. That’s a pattern that neither Germany nor any other market in Europe can afford to keep up, given that Russia – which traditionally supplies a quarter of the EU’s gas – has cut its shipments almost to zero due to its war in Ukraine.

“The figures from this week are very sobering,” said BNA head Klaus Mueller in a statement. “Without significant savings by households, it will be hard to avoid shortages this winter.”

He acknowledged that last week’s temperatures had been well below those normal for the time of year – a sharp reminder of what an important and unpredictable role weather has in determining overall demand levels – but stressed: “Savings must be made even when temperatures fall, and they will not happen by themselves.”

Mueller’s comments came on the same day that German newspaper Handelsblatt reported that the government may spend up to 200 billion euros this year on gas subsidies for industry and households – subsidies that are likely to sustain demand at levels the regulators see as unsustainable.

Any remaining faint hopes of a resumption of Russian gas supplies have been – literally – blown up this week, by sabotage of the two Nord Stream pipelines that carry gas from Russia under the Baltic Sea to Germany. The explosions happened less than a day before Russian gas monopoly Gazprom (MCX:) threatened to stop business with Ukraine’s pipeline operator Naftogaz over a payments dispute, which would effectively end almost all of its remaining shipments to Europe.

Spain joined several other European governments on Thursday in saying that Russia was most likely responsible for the explosions. Kremlin spokesman Dmitry Peskov called such judgments “stupid and absurd” on Wednesday.

Benchmark European gas prices had risen sharply in response to that news, but they fell after Mueller’s comments and after reports suggesting that the European Union is looking to water down the importance of benchmark spot prices in the wholesale market in setting final energy bills.

By 05:55 ET (09:55 GMT), the in the Netherlands, the current benchmark for many northwest European gas contracts, was down by 7.2% at 192.28 euros a megawatt-hour.

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