Christoph Steitz and John O’Donnell

FRANKFURT, (Reuters) – A plan is being developed by a German business to utilize an auction system in order to ration supplies to Russia should it cut off gas. However, some worry that this could lead to the exclusion of smaller companies.

After Russia cut off gas supplies to Poland and Bulgaria last month, there has been a lot of discussion about possible rationing.

There are increased concerns about what will happen to Germany. Germany has been heavily dependent upon Russian gas for many years and faces a deadline next month to purchase the fuel in a Moscow-requested scheme.

Further adding to the anxiety, Gasum, Finland’s energy supplier, said Russia might cut gas supplies next week. Helsinki has ended decades of neutrality and is now seeking membership in NATOTOO, Moscow’s opposition to enlargement.

A German Bundesnetzagentur (BNetzA) action plan outlines which companies are to be prioritized in rationing during a crisis.

According to the company, “Depending on the severity of the shortages… it may be necessary…to reduce supply of gasoline to some users down to zero.”

The agency said that it could delay cuts in gas to the industry by determining that an organization played an “exceptional role”, but that is still not clear.

Klaus Mueller, President of BNetzA has stated that many factors will be taken into consideration when determining industry gas rationing. This includes the size of the company and the importance of the sector.

German industry is very concerned about the energy-intensive factories like glass, steel or food manufacturing.

Industry experts believe that the regulator won’t be able to create a cohesive rationing system because of interconnected manufacturing supply chains and difficult to predict knock-on effects.

RAISING PAIN LIMITS

The Federation of German Industries (BDI) has proposed a system similar to an auction to try and control the situation. It will be presented to Germany’s regulator at the beginning of June.

According to an industry source, the state will reimburse companies for cutting down on gas consumption, whether they do so temporarily or over a longer period, and leaving more money to support critical sectors.

A source claimed that this model would distribute gasoline based on its price. These details are still in development.

However, Germany’s medium- and small-sized companies, which fall under the umbrella of BVMW’s lobby group “mittelstand”, are concerned about the possibility of gas rationing being used to fund the scheme.

Hans-Juergen Völz, chief economist of the group, stated that auctioning gas rights was not fair. He said such a plan could close medium-sized businesses.

A mittelstand company has a lower pain threshold than companies that are financially well-off.

Chief regulator Mueller stated last week that it was possible to auction gas rationing for profit.

Germany already has such a system in place to help it get off of coal.

Utilities make offers for compensatory payments to be paid for idled coal-fired power station.

The state will give a handout to larger companies that are willing to pay the least amount in exchange for their shutting down. This leaves more power stations open, which is better for everyone.