A fee to assist energy providers in covering the expense of replacing Russian supply will force German consumers to spend hundreds extra per year for gas.

Germany bought more than half of its gas from Russia before to the Ukraine War.

Germany already has some of the highest gas prices for households in Europe.

The government said that the action was required to stop the German energy market from collapsing.

The fee, which will go into effect on October 1 and last until April 2024, would be followed by more household assistance, according to ministerial promises.

Since the invasion of Ukraine, gas prices have increased as a result of Western nations’ sanctions and commitment to gradually phase out Russian supplies.

The EU has stated that it will reduce Russian gas imports by two-thirds within a year, but has refrained from outright banning them.

German gas market operator Trading Hub Europe claimed to have set the charge at 2.419 cents per kilowatt hour (kWH).

The Verivox price comparison tool calculated that the levy will equate to an extra yearly cost of about €480 ($489; £404) for a typical household of four with an average gas bill of €3,568.

The fee will also apply to businesses, and the Federation of German Industries has requested greater assistance.

“The levy is a consequence of Putin’s illegitimate campaign of aggression against Ukraine and the fake energy crisis imposed by Russia,” stated Economy Minister Robert Habeck.

The collapse of the German energy market, along with significant portions of the European energy market, would have been the alternative, he told reporters.

Economists cautioned the tax will accelerate Germany’s 8.5% July inflation rate (the pace at which prices are growing).

The German government has implemented subsidies for low-income households and is currently spending an additional €15 billion on fuel subsidies by lowering the taxes on gasoline and diesel, giving people one-time payouts of €300, increasing child support payments, and offering discounts on public transportation.

Germany has urged its residents to use less energy, and in June it implemented steps including dimming street lights, shutting off fountains, and decreasing swimming pool temperatures.

Gas prices increased last month as Russia significantly reduced supply through the Nord Stream 1 pipeline to Germany and other central European nations.

Russia attempted to defend the reduction by claiming that it was required to accommodate maintenance on a turbine, but the German government insisted that there was no technical basis for doing so.

Globally, rising gas prices have a cascading effect on home energy costs.

The average annual energy bill in the UK is anticipated to increase from its current level of £1,971 to £3,582 in October.