Power surge

Pumping up the Price

Pretty, but pricey power. Source: DPA
Pretty, but pricey power.
  • Why it matters

    Why it matters

    Germany pays some of the highest power prices in Europe, in part because of a surcharges to finance its switch to renewable energy sources.

  • Facts

    Facts

    • Twenty-four of the 33 network operators will raise grid charges in 2015.
    • The German government recently announced the renewables surcharge would not rise for the first time in 14 years in 2015.
    • Gird operators argue that Germany’s energy transition to renewable sources requires new and better power lines.
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    Audio

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Just a week ago, German electricity consumers were finally celebrating some good news: The government announced a surcharge financing Germany’s switch to green energy would not rise for the first time in 14 years.

That meant the biggest factor behind the country’s surge in power prices in recent years would remain stable in 2015. But the consumers probably cheered too soon: According to information obtained by Handelsblatt, something else is set to push electricity prices higher. The fees charged by network operators for transporting electricity are likely to rise in some cases by double-digit percentages. And these fees already constitute about one-fifth of total electricity prices.

The grid charges will add up to an average of a net €212, or $269, next year for a representative German household with an annual usage of 3,000 kilowatt-hours, according to a study by the green energy provider Lichtblick, which has been made available to Handelsblatt. That would make next year’s bill 3.5 percent, or €7.40, higher than this year.

Lichtblick analyzed the price tables for 33 large network operators, which they had to make public by an October 15 deadline. At least 24 firms are raising the grid charges, which include a flat fee on top of the transport per kilowatt-hour rate, as well as the costs of measurement and billing.

Electricity Prices

Some customers will have to swallow substantial increases. A network operator in northern Germany is raising the grid charge by almost 19 percent, to €269. If the electricity supplier were to pass these costs completely on to the consumer, the electricity bill would increase by almost €43. A network operator in the eastern state of Brandenburg is requiring about €27 more, and one in southern Germany about €25 more.

The costs for consumers differ greatly by region, ranging from around €170 to €305. “Under cover of (Germany’s) energy transition (to renewables), the network monopolists are again driving up prices,” said Heiko von Tschischwitz, Lichtblick’s founder and CEO. “At the same time there is no transparency of investments or costs for the consumer.”

Lichtblick, like hundreds of other power suppliers, is forced to collect higher fees from the customers, even though others are responsible for the higher costs. More than half of German electricity prices are made up of taxes and duties, and the grid charges constitute about one-fifth of the total. The rest is subject to market forces. The procurement of wholesale electricity makes up about 20 percent, leaving the provider to cover costs for sales and marketing and hope that sufficient margins remain.

The grid operators that have monopolies in their areas justify the higher charges because of their investments in the power supply network.

Although the wholesale power prices have gone down, the consumer portal Verivox calculates a regional increase in retail prices because of the rising grid charges.

The grid operators that have monopolies in their areas justify the higher charges because of their investments in the power supply network. They argue that in particular the energy transition to renewable energy requires new and better lines.

When contacted by Handelsblatt, the German Federal Network Agency, which regulates the fees, declined to comment yet on the planned increases. The authorities were still in the process of evaluating the recently released rates, said a spokesman. He said the picture was very mixed nationally.

Lichtblick chief Mr. Tschischwitz said the operators are guaranteed to receive returns that are too high. “The policies must provide stricter cost controls,” he said.

 

Jürgen Flauger covers the energy sector for Handelsblatt. To contact the author: Flauger@handelsblatt.com

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