German Cartel Office Concludes Electric Heating Abuse Proceedings

The German Cartel Office concluded abuse proceedings against providers of electricity for night storage heaters and heat pumps. The investigated companies as well as numerous other market participants agreed to various market opening measures. In addition 13 utilities will compensate some 530,000 customers with a total of EUR 27.2 million.

The Office published a detailed market overview and report about the proceedings.

Compensations will be made directly in the form of reimbursements and indirectly through the non-implementation of price increases. In view of the proceedings, the utilities had not raised prices for 2010 despite higher costs for renewable energy. For 2010, the Cartel Office estimates that at least EUR 20 million of additional renewable energy costs pursuant to the Renewable Energy Sources Act (EEG) have not been passed on.  The Office expects additional costs for renewables to increase further in 2011. Hence, the Office believes electricity prices for electric heating will generally rise again in 2011.

Some two million households (4%) use electricity for heating purposes in Germany. In their respective supply areas, providers of electricity for heating purposes are basically without competition. Unlike in the general market for electricity, there are a number of market entrance barriers for newcomers in the market for electric heating. Hence, consumers do not have the possibility to switch providers.

Utilities have now agreed to implement the following measures intended to open the market:

  • Transparent publication of electricity prices for electric heating
  • To establish load profiles depending on temperature
  • Transparent publication of the load profiles on the internet

In addition, the companies committed to charge only the lower concession fee (Konzessionsabgabe) for special contract supply (Sondervertragslieferungen) of 0.11 ct/kWh. Depending on the supply area, this will also reduce prices.

“These structural measures will pave the way for new market entrants. The Office hopes for increased competition and more providers that the customer can choose from” Andreas Mundt, president of the Cartel Office, said.

Source: German Cartel Office

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