Wholesale prices fall: Why households have to keep waiting for falling gas prices

According to estimates by the Federal Network Agency, consumers in Germany will only benefit from the lower wholesale prices for gas in a few months. “It should take six to twelve months before the reduction in wholesale prices for gas and electricity also reaches household customers,” said the head of the Federal Network Agency, Klaus Müller, of the “Rheinische Post” (Saturday). “This is due to the term of the contracts and the purchasing strategy of the company.”

He expects companies to make price cuts, said Müller. “However, it will not be as cheap as it was in 2021.” The wholesale prices for gas, which were over 300 euros per megawatt in late summer, have fallen to around 50 euros. That is far more than in 2021, but the new normal. “We have to get used to higher prices, the era of cheap energy from Russia is finally over,” said Müller. Persistently higher prices required companies to become more efficient. “A lot of progress has been made here. The companies will have to keep making efforts,” said the head of the authority.

“We get a lot of complaints from consumers who criticize the high prices of their utility,” said Mueller. Consumers would have a special right of termination if prices were increased. And if companies violate consumer rights, the Federal Network Agency can take action. The Federal Cartel Office monitors that suppliers do not abuse the price brakes.

At the end of February, Chancellor Olaf Scholz asked the energy companies to pass on falling wholesale prices to consumers. He “expects that the energy companies will not take advantage of the situation and make special profits,” he told the “Bild” newspaper. The energy industry then emphasized that electricity and gas providers generally do not take advantage of the market situation. “The first price reductions by individual gas suppliers show that competition on the gas market is working and that the energy suppliers will pass on price reductions as soon as their procurement situation allows it,” Kerstin Andreae said.

Because of the Russian war of aggression against Ukraine, natural gas prices had risen drastically in 2022. At the peak, prices of more than 300 euros were paid, after natural gas had cost around 20 euros per MWh for a long time. The price of natural gas has been in a continuous downward trend since December. The comparatively well-filled natural gas storage facilities are one of the main reasons for this. In the first week of March, the price for the trend-setting TTF futures contract for delivery in one month fell to EUR 42.50 per megawatt hour (MWh). European natural gas was cheaper previously in August 2021. Most recently, the price was just over 43 euros.