BERLIN (Reuters) – Germany will enter Phase 2 of its three-stage emergency gas plan on Thursday but a clause that lets utilities pass on soaring gas costs to customers will not yet be triggered, according to sources familiar with the matter.

The Phase 2 “alarm stage”, planned for when the government sees a high risk of long-term supply shortages of gas, theoretically enables utilities to pass on high prices to industry and households and thereby help to lower demand.

Facing dwindling gas flows from main supplier Russia, Europe’s top economy has been at Phase 1 of its emergency plan since end March.

A move to Phase 2 has been the subject of speculation since Russian supplier Gazprom cut flows via the Nord Stream 1 pipeline to just 40% of capacity last week.

The Economy Ministry declined to make a statement before a planned news conference at 0800 GMT.

Reporting by Holger Hansen and Christian Kraemer; writing by Miranda Murray and Christoph Steitz; editing by David Goodman and Jason Neely

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