Abuse control relating to energy price relief measures: proceedings to examine power sector initiated

The Bundeskartellamt has again initiated examination proceedings based on the laws on energy price relief. The proceedings now initiated focus on energy suppliers that have applied for advance payments with regard to the supply of electricity under the German laws on energy price relief.

The laws’ prohibitions of abusive practices aim to prevent companies from charging customers prices which result in the companies obtaining unjustified relief payments from the state. The Bundeskartellamt is already conducting examination proceedings against gas suppliers (see press release of 15 May 2023) and heat suppliers (see press release of 30 May 2023).

Andreas Mundt, President of the Bundeskartellamt: “In the third round of proceedings we are examining a double-digit number of electricity suppliers that have applied for advance payments under the energy price relief laws. The suppliers in question include distributors belonging to large energy corporations, as well as municipal utilities, regional suppliers and also small discounters and suppliers with a focus on renewable energy. They represent about 20% of the total relief payments applied for with regard to the supply of electricity to private households and small businesses. Additionally, we are examining several suppliers that have claimed relief payments with regard to the supply of electricity to large customers which consume over 30,000 kWh per year.”

Before initiating these power sector proceedings, the Bundeskartellamt analysed all application and registration data available for the months of January 2023 to May 2023.The data was provided by the four electricity transmission system operators that process the applications on behalf of the German government. It concerns about 12,000 applications from which in particular information on pricing, supply volumes, relief amounts and the number of customers could be gathered. The suppliers identified as raising questions are now being surveyed in particular on the prices they charged, the costs they incurred and how both developed over time.

If infringements are found to have occurred, reimbursement payments that have been unlawfully obtained must be repaid to the electricity transmission system operators. The imposition of fines is also possible.

Just like electricity suppliers, customers that act as their own supplier – referred to as “other end consumers”, notably industrial customers – can also claim relief payments on the basis of the law on capping the prices of electricity. The Bundeskartellamt can examine these claims for irregularities too. So far, only a very small number – approximately 50 – of such industrial customers have made use of this relief mechanism, with smaller sums to be paid out to them than to electricity suppliers. For the time being, the Bundeskartellamt has prioritised the initiation of proceedings against electricity suppliers.

Background

When the laws capping the prices of electricity (StromPBG) and pipeline-based natural gas and heat (EWPBG) entered into force, the Bundeskartellamt’s tasks were expanded to include the energy-specific control of abusive practices under these laws. In contrast to abuse control under competition law, the Bundeskartellamt’s intervention based on the energy price relief laws does not require companies to have a dominant position. If companies apply for reimbursement under the energy price relief laws, they are subject to the new abuse control provisions.

The Bundeskartellamt already provided background information on the energy price relief laws after the new laws had entered into force in December 2022 (see press release of 20 December 2022).

The energy price relief measures are intended to ease the burden of gas, heat and electricity price increases on consumers by capping these prices for a set quota (normally 80 per cent of the previous year’s consumption).

Consumers only pay the statutory capped price per kilowatt hour until their quota is used up. As long as consumers do not exceed their quota, they will not have to pay higher energy prices exceeding the price caps while the price relief measures are in force. The government will compensate energy suppliers for the difference between the contractually agreed unit rate per kilowatt hour and the statutory price cap. The price relief laws prohibit the exploitation of the rules which are meant to ease the financial burden on consumers (Section 39 StromPBG and Section 27 EWPBG). In particular, this is to prevent a situation where energy suppliers could obtain higher statutory reimbursement payments by raising their (end customer) unit rates for gas, heat or electricity without any objective justification resulting from increased costs.