Chancellor Olaf Scholz promised to shield Germans from surging energy costs on Friday as the government agreed a rescue package for key gas company Uniper, which has been brought down by market turmoil from the war in Ukraine.
Interrupting his summer holidays to give a press conference in Berlin, Scholz reassured Germans they would "never walk alone" with the burden of spiralling gas and electricity costs.
The government is planning a housing benefit reform from next year as well as flat-rate payments to help consumers pay their bills, Scholz told reporters after the Uniper announcement.
"No one will be left alone with their challenges and problems," he said.
Russia's war in Ukraine has caused an energy earthquake in Europe and especially in Germany, which is heavily dependent upon Russian gas.
EU states have accused Russia of squeezing supplies in retaliation for Western sanctions over the war, with Germany accusing Moscow of using energy as a "weapon".
Russia on Thursday restored critical gas supplies to Europe through Germany via the Nord Stream pipeline after 10 days of maintenance, but at low volumes, and suspicions linger that the Kremlin may trigger an energy crisis on the continent this winter.
- Rescue plan -
German gas giant Uniper, threatened with bankruptcy as a result of the crisis, on Friday said it had agreed a rescue plan with the government.
The plan "comprises a capital increase of approximately 267 million euros ($271 million) for an issue price of 1.70 euros per share", which will lead to "a shareholding of the (state) in Uniper of approximately 30 percent", Uniper said in a statement.
The group will benefit from a public loan of "up to 7.7 billion euros" in mandatory convertible bonds that will eventually become shares.
An increase is also planned in the credit line available to the firm via the public lender KfW from two to nine billion euros, Uniper said.
"Uniper is a company of vital importance for the economic development of our country and for the energy supply of our citizens," Scholz told reporters after the announcement.
Uniper also said the German government was planning to introduce a general mechanism for all gas importers to pass through the replacement costs for missing Russian gas to consumers as of October 1.
This measure, long requested by the energy giant, could cause consumer gas bills to explode.
- Energy savings -
Scholz said this could mean that a family of four would have to pay 200 to 300 euros more per year.
The government wants to ensure that the impact of this is "spread over all of our shoulders", he said.
Moves by Moscow to curtail supplies to Germany since mid-June have forced Uniper to turn to the more expensive spot market for gas to supply its customers, leaving the energy group saddled with the extra cost.
One of the biggest importers of Russian gas, Uniper is a key part of Germany's energy infrastructure and its biggest gas storage operator.
While the German government has mandated stores to be filled ahead of the winter, the short supply has also forced Uniper to withdraw gas from its own booked storage capacities.
The group made a request for a bailout from the German government on July 8.
Since then, negotiations have been ongoing between Uniper, the German government and the Uniper's Finnish parent company Fortum.
In addition to boosting its gas reserves, Germany is implementing plans to temporarily revert to more coal power.
It is also planning to mandate energy savings in public buildings and impose new rules for efficiency in heating homes and offices.
The European Commission this week urged EU countries to reduce their demand for natural gas by 15 percent over the coming months, and to give it special powers to force through needed demand cuts if Russia severs the gas lifeline.