German Cartel Office Issues Decision Against Entega Ordering Refund of EUR 5 Million to Customers

The German Cartel Office issued a decision against the Darmstadt based utility Entega, ordering the company to refund customers supplied with electricity for night storage heaters and heat pumps with a total of approximately EUR 5 million. The decision is based on an investigation of heat energy prices that Entega charged household customers and small-sized commercial customers between 2007 and 2009. The Cartel Office came to the conclusion that they were abusively excessive.

The decision means that roughly 23,000 customers can expect refunds of on average EUR 215 plus interest and VAT, the individual amount being dependent on the consumption, the Cartel Office said in a press release. Entega, however, already announced to file a complaint with the Higher Regional Court of Düsseldorf. The company said it expected a ruling to take some time.

In late September 2010 the German Cartel Office concluded abuse proceedings against 17 providers of electricity for night storage heaters and heat pumps. 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. The majority of the companies investigated between 2007 and 2009 as well as numerous other market participants agreed to refunds, price reductions and various market opening measures in the September 2010 settlement. Entega was not among them.

Compared to the other companies investigated, Entega was the most expensive supplier of electricity for heating purposes, the German Cartel Office said. When no settlement could be reached with Entega, the Cartel Office carried out a comprehensive comparison of Entega’s revenue with that of other suppliers of heat energy to find out whether the comparatively high prices were justified taking into consideration Entega’s higher costs for the procurement of electricity which are due to load profiles for heat energy stipulated by the grid operator in Entega’s supply district. Yet even these special circumstances could not fully explain Entega’s pricing, the Cartel Office said.

In its press release Entega defended its price policy and said that the fact that the Cartel Office reached settlements with the other suppliers had been criticized by the Monopolies Commission (Monopolkommission) in its latest report on the energy markets. The latter is indeed true. In paragraphs 720 to 739 the report deals with the investigations of the Cartel Office and the subsequent settlements, criticising certain aspects of the methodology used by the Cartel Office and deploring that due to the settlements the courts did not decide about the cases (see paragraph 739). The current developments in the Entega case may therefore now lead to a clarification of the matter by OLG Düsseldorf.

Source: German Cartel Office, Entega

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