New rules for energy suppliers
Intervention in price sovereignty has a stale aftertaste
By Laura Esslinger
01/30/2022, 10:09 am
Electricity and gas customers should be better protected against short-term and excessive prices – the federal government plans to change a law in the spring. However, the new regulation could still have a negative impact on the wallet of some consumers.
Several gas and electricity suppliers are currently evicting large numbers of customers because of high energy purchase prices. Affected consumers automatically slip into the basic service, but they often have to pay considerably more for it. At the beginning of the week, the federal government therefore announced a legal reform with which it intends to alleviate the turbulence on the energy market and to better protect consumers.
The timetable for this is now in place: Federal Economics Minister Robert Habeck intends to get the amendment through by spring. “The intended changes in the Energy Industry Act should be passed in the cabinet by Easter and then promptly in parliament,” said Oliver Krischer, Parliamentary State Secretary in the Federal Ministry of Economics, to “Capital”.
The Energy Industry Act regulates the supply of electricity and gas in Germany. It is intended to ensure a seamless, inexpensive and consumer-friendly supply of energy. But that’s exactly where the problem lies. “It was and is a great burden for many people and a great shock to suddenly find a cancellation from the gas or electricity provider in the mailbox,” said Krischer. “We must not leave consumers out in the rain like this again.”
Announcement several months in advance
Several changes are planned in the Energy Industry Act: On the one hand, suppliers should have to terminate their customers with more advance notice in the future. “So far there has been no legally defined period of notice for companies,” says Ralf Müller-Terpitz, Professor of Public Law and Economic Regulation at the University of Mannheim, to Capital.
State Secretary Krischer therefore believes it is necessary for suppliers to announce the delivery stop several months in advance so that consumers can look for a new supplier in peace. On the other hand, the Federal Network Agency should be able to better identify dubious competitors.
“The fact that around one million gas and electricity customers are terminated within a very short time must not be repeated,” said Krischer. So-called low-cost electricity providers such as Stromio or Immergrün stopped delivering to all customers at the end of 2021 – but in some cases only informed them after the supply had stopped. The reason given by the discount providers is the high raw material prices on the energy exchanges. “It is not possible for them to simply stop working before a termination with the contractually agreed notice periods and sometimes only announce this afterwards,” says lawyer Müller-Terpitz. The Federal Network Agency, as the responsible regulatory authority, has the option of prohibiting the supplier from such behavior.
Price explosions cause business model to skid
As a rule, energy suppliers buy the electricity for their customers well in advance in order to protect themselves against price fluctuations. Low-cost electricity providers, however, only stock up when electricity or gas is particularly cheap. Otherwise they would not be able to keep the cheap prices that attract many consumers. Because there have been price explosions on the energy market for around a year, they are getting into trouble with this business model.
Müller-Terpitz believes that the Energy Industry Act should now be supplemented with a passage on longer notice periods. “The legislature could prescribe that all energy suppliers have to give notice three months in advance. I think this period is a fair compromise,” says the lawyer. However, the law already makes it possible to regulate the length of the notice period by way of ordinance.
Consumers who are shown the door by the provider are covered by the basic service. This is always provided by the company that supplies the most customers in the respective grid area. Often these are municipal utilities.
Different prices for new customers
Because a number of basic suppliers were not prepared for so many new customers within a short time, they split their tariffs without further ado and charged more money from the new customers than from their existing customers. At Stadtwerke Pforzheim, for example, consumers who were existing customers before December 22, 2021 pay a working price of 31.98 cents per kilowatt hour. However, anyone who falls into the basic service from this date will have to pay a whopping 107.66 cents.
“These prices are due to the point in time when we had to additionally calculate and reorder energy in order to be able to accommodate the many customers (we are talking about a four-digit number here) who, after the delivery stop, from Stromio and gas.de, among others, had to be included in our supply,” said Stadtwerke Pforzheim when asked by Capital. Stadtwerke Gütersloh justify the price difference in a similar way.
According to the supplier, the tariffs in Pforzheim have now been adjusted retrospectively because the situation on the energy market has stabilized. New customers would now be charged 55.24 cents – which is still a good 20 cents more than the price for existing customers. The traffic light coalition also wants to put a stop to this tariff splitting. There is a need for action, said Krischer. One wants to ensure uniform tariffs in the basic service, so that new customers do not have to pay twice or three times as much as existing customers. “Split basic service tariffs are ultimately just an unnecessary employment program for courts, which we want to avoid,” says Krischer.
New regulation with a pale aftertaste
Regulatory lawyer Müller-Terpitz considers the plans to be understandable. “It makes sense to sharpen the law. The intervention of the state would not be that big.” However, the regulations in the Energy Industry Act already offer the federal government options for action, similar to the notice periods. “I already understand the law in such a way that the replacement supply must not be more expensive than the basic supply,” says Müller-Terpitz. Energy companies should not simply demand a new and more expensive tariff from new customers, but are obliged to offer a uniform basic supply tariff. This is exactly what consumer advocates are insisting on and warning energy suppliers about. “The idea of only protecting existing customers is economically understandable, but it is most likely already inadmissible,” confirms the lawyer. If a provider increases the basic service tariff, it must do so for all customers.
However, the new regulation could have a stale aftertaste for some consumers. Because: “The reform will mean that the prices for all customers of the basic service will temporarily increase,” says Müller-Terpitz. This is annoying for existing customers. “The only thing left for you to do is to cancel without notice and switch providers.”
It is considered likely that the new regulation will come anyway. From circles of the Ministry of Economic Affairs it was said that the responsible actors agreed that there was a need for regulation after the large energy suppliers with electricity and gas stopped delivering. In addition to the Ministry of Economic Affairs, the Ministry of the Environment and Consumer Protection, the Federal Cartel Office and the Federal Network Agency are responsible.
This article is first at capital appeared.