Warning for public utilities: two-class system for electricity customers

As of: 01/14/2022 5:55 p.m

Regional utilities have thousands of consumers, while cheap electricity providers have recently terminated thousands of contracts. Affected consumers are now supplied by regional suppliers. In return, they often charge much higher prices than old customers. Consumer advocates take legal action against it.

By Notker Blechner, tagesschau.de

Many electricity customers feel doubly punished. First, cheap electricity providers like Stromio canceled their contracts. They then switched to the basic supply of the regional providers – and experienced their next shock there. The regional utilities raised the prices – and strong. According to calculations by Check24, 337 basic suppliers have introduced special new tariffs exclusively for customers who are now dependent on the replacement supply due to termination by other suppliers. The prices have risen by around 103 percent on average, the comparison portal said tagesschau.de.

On average, prices for new customers doubled

The North Rhine-Westphalia consumer advice center made similar observations in a sample of 23 regional providers. 18 companies introduced a new customer tariff. “The difference between the prices for new customers and existing customers is more than double on average,” the consumer advocates announced yesterday. With three providers, new customers who slipped into the basic supply because their electricity provider had canceled had to pay as much as 90 cents per kWh. The average price in North Rhine-Westphalia is 34 cents per kWh.

Consumer advocates from other federal states are also reporting exorbitant price increases in basic service tariffs. For example in Saxony-Anhalt, Rhineland-Palatinate, Baden-Württemberg and Hesse. Frankfurt-based Mainova, which recently included thousands of customers who had been terminated by Stromio and Gas.de in its basic service, has introduced a tariff for new customers. The cost of gas is almost three times as expensive for them as for existing customers. “We consider the different pricing for existing and new customers to be very questionable,” says the consumer advice center in Hesse.

Consumer advocates are taking action against municipal utilities

The consumer protection center of Rhineland-Palatinate criticizes the suppliers for creating second-class customers. “We consider a two-class basic supply to be contrary to the system and therefore impermissible,” says Fabian Fehrenbach, consultant for energy law. The basic supply of energy is part of the general interest. The prices would therefore have to be designed in a socially acceptable way for all customers. With the expensive new customer tariff you punish those who looked for a cheap provider and then switched.

The consumer protection center of North Rhine-Westphalia warned the three suppliers Rheinenergie, Stadtwerke Gütersloh and WSW, a subsidiary of Stadtwerke Wuppertal. “With all understanding for the not very simple situation of the basic suppliers – that’s not how it works,” complained Wolfgang Schuldzinski, head of the consumer advice center. Disadvantaging consumers who fall back into the basic service through no fault of their own is illegal.

Low earners “are desperate”

Many of those affected are already reporting to consumer protection organizations every day. They are desperate about the immense gas and electricity price increases. Low-income households are particularly hard hit.

If the suppliers do not give in within a week, the consumer advice center NRW wants to file a lawsuit. She also called on the regional energy cartel authority to act.

Public utilities are fighting back

The warned Stadtwerke reacted with incomprehension to the allegations of consumer protection groups. “As a basic supplier, we set up safety nets for customers who are dependent on the replacement supply due to the ruthless market behavior of other market participants,” Rhein-Energie explained to the “Kölner Stadtanzeiger”. Stromio & Co. would have simply unloaded their business risks with the basic suppliers and simply thrown customers out. The NRW consumer advice center is now demanding “that we make all of our customers pay for the fact that these electricity distributors behaved in a customer-hostile manner.”

The suppliers justify the higher prices with the unexpectedly large number of customers. They would have bought energy in the long term. However, the quantity is not enough for the numerous customers. They would now have to buy them later on the futures markets at high cost.

Associations defend the high tariffs for new customers

Backing comes from the lobby associations. The Association of Municipal Enterprises (VKU) defends the introduction of special tariffs for new customers. The municipal utilities in particular had planned with foresight and could therefore save their customers uncertainty and even larger price jumps, said VKU general manager Ingbert Liebing.

The Federal Association of Energy and Water Management (BDEW) also criticized the consumer advocates. “If the basic suppliers had to accept the new customers at the same rate as for the existing customers, then the costs for everyone would rise,” explained General Manager Kerstin Andreae. In addition, no customer is forced to stay in the replacement supply, the tariff can be changed within a day. “Dubious cheap electricity providers do not meet their delivery obligations and pass their home-made problems on to the basic suppliers,” she said.

More customers, more expensive purchase of electricity

The basic suppliers would have to buy additional electricity or gas quantities in energy trading overnight for the customers concerned. In regions where many customers were affected by contract terminations, the “expensive short-term purchase of additional quantities and the collateral required for this” could bring basic suppliers into economic difficulties.

According to the Federal Network Agency, 39 energy suppliers in Germany stopped delivering to their customers last year. This is twice as much as in previous years.

Regional differences

By the way: the utilities are not raising the prices everywhere. In Hamburg, for example, Vattenfall has included numerous customers in the replacement supply and does not charge a surcharge. The new customers pay the previous basic service price.

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