Pay Bills

How Europeans react to exorbitant gas and electricity bills

A German pensioner facing exorbitant energy bills turns to a wood-burning stove. The owner of a dry-cleaning business in Spain adjusted her employees’ working hours to reduce electricity bills and installed solar panels. A mayor in France said he had ordered a hiring freeze because rising electricity bills threatened to cause a financial “catastrophe”.

Europeans have long paid one of the highest energy prices in the world, but no one remembers a winter like this. Lives and livelihoods across the continent are being disrupted by a range of factors, including pandemic-induced supply shortages and now geopolitical tensions that are causing some energy prices to quintuple.

Things could get worse if tensions between Russia and Ukraine escalate further, potentially interrupting the flow of gas. Russia provides more than a third of Europe’s natural gas, which heats homes, generates electricity and powers factories. Even as politicians and leaders in capitals across Europe freeze prices, cut energy taxes and issue checks to households hardest hit by price rises, concerns are growing that Persistently high prices could mean for people’s jobs and their ability to pay their bills.

“People are very upset and very distressed,” said Stefanie Siegert, who advises consumers in the eastern German state of Saxony who are struggling to pay their gas and electricity bills.

Germany has so far seen no protests over sky-high energy bills like those that filled the streets of Spain last year, or an explosive outcry over inequality at the so-called waistcoat movement. yellows which rocked France in 2018. But Ms Siegert, whose agency advised more than 300 clients in January – three times its monthly average – said she would not be surprised if the anger currently directed at the prospect of a vaccine mandate turned to energy prices.

“When you talk to people, you feel their anger,” she said. “It’s very depressing.”

Henry Backhaus, 65, is one of tens of thousands of Germans who have been dumped by private energy companies that could not afford to buy electricity and gas wholesale at skyrocketing rates. Under German law, the local utility was then required to step in, but sent him a bill for 747 euros (nearly $850) a month, more than he had paid for an entire year .

“I’m a retiree,” he said, looking over the pile of documents spread out on his dining room table. “It’s more than I can afford.”

But Mr Backhaus, who lives in a three-storey house in Saxony, has an alternative that could make him the envy of millions of other Germans struggling with high energy bills: he has a large wood-burning stove in his living room and, in his basement next to his gas furnace, a furnace that burns coal or wood.

The stove and furnace, installed before the house was hooked up to a gas line, allow him to dial down his radiators to just 18 degrees Celsius, or 64 degrees Fahrenheit, essentially cutting his gas bill in half.

“I still have a stash of charcoal briquettes and piles of dried wood,” he said as he shoved another log into the stove. “But it’s only temporary. It’s not a long-term solution.”

Most people don’t have the ability to burn wood or coal, leaning instead of piling up layers of clothing. In Britain, the government price cap on energy bills was recently raised by 54%, raising annual charges to 1,971 pounds. The increase will affect 22 million households from April, helping to widen concerns in Britain about the rising cost of living.

Similar concerns can be found across the continent.

Athina Sirogianni, 46, a freelance translator in Athens, said she fondly remembers the day a decade ago when her building was converted from oil to natural gas. The move cut his utility bill in half.

Today, his heating bill is almost triple that of last year.

“I keep trying to think about where I can cut my expenses so I can pay the bills,” she said, adding that she hadn’t been to the hairdresser in almost a year and that she had reduced her food purchases to the essentials.

The price of energy is also forcing shutdowns or slowing production at manufacturers across Europe, even as they are eager to fill a backlog of orders and get back to pre-pandemic levels of activity.

The cast iron industry was particularly hard hit. Nyrstarthe world’s second-largest zinc processor, produces nearly 500 tons of metal every day at a sprawling factory in Auby, northern France, a complex that consumes as much energy as the French city of Lyon.

When its electricity tariffs rose from €35-50 per megawatt-hour to €400 last December, it made no sense to keep the plant running, said Xavier Constant, managing director of Nyrstar France. At this rate, he said, “the more we produce, the more we lose”, and so the factory closed last month for three weeks.

Nyrstar temporarily halved production at its other European plants in October when the energy crisis hit, causing the global zinc price to spike briefly.

Last autumn fertilizer factories in Britain were forced to close due to high petrol prices. And several German companies that produce glass, steel and fertilizers have also cut production in recent months.

To ease the burden of high prices, the Berlin government has halved an energy surcharge on bills aimed at funding the country’s transition to renewable energy sources, and plans to phase it out by the end of next year.

But industry leaders say it’s not soon enough. Almost two-thirds of the 28,000 companies surveyed by the Association of German Chambers of Commerce and Industry this month rated energy prices as one of their top business risks. For those in the industrial sector, the figure was 85%.

Small businesses, too, are scrambling to find ways to cut costs.

Pilar Ballesteros Parra, co-owner of Ronsel, a dry cleaning company in Madrid which employs 10 people, said her company’s electricity prices had risen by around 20% compared to the previous year. In response, it rearranged the work schedule of its employees, starting the shift early and pushing the night shift until later in the evening so that dry cleaning equipment could operate when rates were lowest. .

It is also installing solar panels on the company building, outside the Spanish capital, so that Ronsel can generate at least 60% of its own energy. The government is helping with a grant of 35% of the $45,000 investment.

“Our building faces south-west and gets lots of sunshine, which means we should be nearly self-sufficient over the next few spring and summer months, which will be a big relief,” she said. .

Yet, she says, the energy crisis and global price inflation meant she saw little chance of sparing some of the burden on her customers.

“There’s clearly this electricity conundrum, but there’s also now wage inflation and much higher gas bills for our vans,” she said. “A few months from now, it’s clear that some of these costs will have to be passed on to our customers if we are to continue.”

A wide range of public institutions are facing constraints related to higher electricity bills. In Poland, hospitals that have already been financially strained by the coronavirus pandemic are now wondering if they can keep their doors open.

“Running a hospital in Poland is becoming more and more like a roller coaster,” said Robert Suroweic, who runs the provincial hospital in Gorzow. on Twitter. He said the facility’s electricity prices had gone up 100%.

He and other hospital managers called on the government in Warsaw to intervene, saying recent energy and gasoline tax cuts were not enough.

In Germany, tension is mounting in municipal utilities that have to accept customers, like Mr Backhaus in Saxony, whose relatively inexpensive contracts have been dropped by private energy companies because the companies cannot pay energy tariffs in rise.

Municipal utilities are forced to raise rates for these new customers, often almost astronomically, to cover the cost of purchasing additional power in the spot market at record high prices. This leads to tensions in communities and can threaten municipal finances.

“Anyone who wishes will be supplied with energy by municipal utilities,” said Markus Lewe, chairman of the German Association of Towns and Villages. “But this should not lead to city utilities and their loyal customers being asked to pay for other suppliers’ questionable business models and having to answer for their short-sighted funding.”

He said called on the federal government to intervene, to protect cities from price instability.

In France, local leaders are also looking to the federal government to help ease the sting of soaring energy bills.

Boris Ravignon, the mayor of Charleville-Mézières, said his city was facing “a disaster” after its January energy bill more than tripled, wiping out the region’s budget surplus for infrastructure and public services in a single month. The city is trying to cut costs by replacing streetlights with LED bulbs, which use less electricity, and has proposed a new hydroelectric project.

The mayor has already frozen planned hiring and said the city may have no choice but to raise the cost of utilities like water, transportation, gym usage fees like city ​​public swimming pool and cultural events.

“We really want to protect citizens from these increases,” Ravignon said. “But when the prices go to such crazy highs, it’s impossible.”

Report provided by Adele Shoemaker In France, Raphael Minder in Spain, Niki Kitsantonis in Greece.