In Luxembourg, the gas market is totally dependent on imports, and reserves in Germany and Belgium are full. The government has introduced measures to contain soaring prices and private individuals are making efforts to reduce their consumption, without seeing the price of these efforts on their bills. Photos: Shutterstock, Montage: Maison Moderne

In Luxembourg, the gas market is totally dependent on imports, and reserves in Germany and Belgium are full. The government has introduced measures to contain soaring prices and private individuals are making efforts to reduce their consumption, without seeing the price of these efforts on their bills.  Photos: Shutterstock, Montage: Maison Moderne

The EU had set the goal of filling up gas stocks as much as possible before the winter, in order to secure the bloc’s supplies. This has now been achieved. At the same time, countries are continuing their efforts to reduce consumption, particularly Luxembourg, which is doing well. However, prices are not yet falling.

Winter is on its way. One thing has become commonplace: turning up the thermostat to turn up the heating. While the war in Ukraine threatened the security of supply in the EU last winter, the risk of a shortage is now limited, as the EU has achieved its objective of ensuring substantial reserves, of at least 90%, before 1 November, under the rules adopted in June by the Council of the EU.

The situation is a little different for Luxembourg. “We do not have and we will never have gas storage on our territory because our geology does not allow it”, the former energy ministry  (déi Gréng), who left office earlier this month, stated on several occasions. Conversely, other members states, such as Germany, Italy, France, the Netherlands and Austria, have just over two-thirds of the EU’s total storage capacity on their territory.

The natural gas consumed here is imported via high-pressure pipelines from Belgium and Germany. “In 2022, almost all the natural gas consumed in Luxembourg was imported from Belgium,” the energy ministry recently stated. It should be noted that while the country has no local stocks, it does produce a marginal amount of biogas via methanisation, which is injected locally into the grid, but which would obviously not be enough to meet the country’s consumption needs (48 GWh produced in 2022). Under European regulations, countries that do not have storage facilities must store 15% of their annual national consumption in the stocks of other member states.

Full reserves in neighbouring countries

Luxembourg’s reserves in Belgium and Germany are full, at 96.35% in Belgium on 22 November and 113.75% for those of Enovos in Germany on the same date. This is shown by the , which can be consulted online and lists stock levels in the EU and neighbouring countries. Clearly, there is no reason to worry about a shortage this winter.

That is particularly true with Luxembourg recent record when it comes to energy savings. Last April, while the EU had set a target of reducing gas consumption by 15%, Luxembourg had cut it by 26.3%. In October, the energy ministry reported a reduction of 33.5% compared with the period 2017-2022. It was also -40.9% in September, -33.4% in August, -20.5% in March, -22.4% in February and -25.5% in January.

Government measures to limit the bill

Before reaching the end consumer, there are the network operators and the gas suppliers. “In 2022, the average residential customer paid €87.2/MWh for the integrated supply of natural gas”, according to the Luxembourg Regulatory Institute (ILR). A comparison of its data shows that between 2021 and 2022, annual bills rose by around €1,057. In 2021, a private individual paid €52.6/MWh for an average consumption of 30,556kWh, i.e. an annual charge of €1,607.

Without the two measures introduced by the state, namely the reduction of network usage charges and the subsidy to limit the price increase in October 2022, the cost would have risen from €87.2/MWh to €106.9/MWh, the ILR said. Both measures are in force until the end of 2024. A typical bill includes the cost of supply (around 40% of the final amount), fees and taxes (around 47%) and infrastructure or network costs (around 13%).

Let’s start with the cost of supply, which, as its name suggests, is the supplier’s responsibility. According to the ILR, 12 natural gas suppliers are licensed to supply Luxembourg. Only six are active in the non-residential market, and five supply private individuals (residential market). One of these suppliers is Enovos. The supplier is part of the Encevo group, which is also the parent company of the energy network operator Creos. Enovos has cited a number of criteria that affect the price of gas: “The usual factors that influence the price of gas are temperatures--in a cold winter, demand increases and so does the price--and global economic development.” The supplier’s strategy is not to buy the quantities required all at once, but do so “on a continuous basis, in order to cushion the effects of sharp fluctuations in market prices. This is why increases in wholesale prices have never been passed on to end customers to the same extent. For the same reason, price cuts are not passed on immediately. For example, the natural gas that is currently being consumed has already been purchased in recent months at the prices that applied at the time.”

A time lag for end consumers

The measure, introduced in December 2022 and extended last summer until the end of 2024, also includes cutting fees and taxes, which account for nearly half of each bill. The fact that the overall price of natural gas for consumers has not rocketed is due in no small part to the measure introduced by the government, which limits the increase in natural gas prices for consumers to 15%. This measure is in place until 2024.

Then there are the infrastructure or network costs. In practical terms, since gas is supplied via pipelines from Norway to Belgium via the Zeebrugge LNG terminal, and then via networks to Luxembourg, supply delivery carries has a cost. “In Luxembourg, Creos is both a distribution system operator and the sole transmission system operator. In addition to Creos, there are two other distribution network operators, namely SUDenergie and the City of Dudelange,” the ILR stated in its . “All the tariffs applied by Creos are set in such a way as to reflect the real costs of the company’s activities”, said the network operator.

Encevo added: “Our tariffs are based on our average purchase costs. However, the bill that the majority of our customers currently receive is significantly lower because of government measures. If the current fall in prices continues, it will also have an impact on our prices.”

We will have to wait a little longer to see the impact on our wallets... provided that winter is not too cold and that the temperatures do not contribute to increasing demand and therefore prices.

To compare prices, ILR and e-Control have launched a comparison tool for gas and electricity offers. After entering your postcode, average annual consumption and other optional fields, the  generates an exhaustive comparison of offers.

Originally published in French by and translated for Delano.

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