The German government will have the right to bail out utilities under proposed legislative changes approved by the cabinet, Reuters reported.
"The situation on the gas market is tense and unfortunately we cannot rule out a deterioration in the situation," Economy Minister Robert Habeck said in a statement.
New amendments to the Energy Security Law will give the government additional tools to bail out utilities if they falter as energy prices rise due to cuts in Russian gas imports.
Under the law, the government can take steps to stabilize energy companies facing financial difficulties and thereby avoid cascading effects in the energy market that could hit consumers, the ministry said.
The law also provides an alternative mechanism for evenly distributing the cost of higher gas prices among all consumers, in addition to the possibility of applying a general price adjustment provision in the event of significant disruptions in gas imports.
Both instruments are subject to strict conditions and are currently not subject to activation, the ministry said, adding that stabilization options for energy companies would take precedence over the two price adjustment mechanisms.
The bill is to be voted on in the lower and upper houses of parliament on Friday.