Together against the split of the German-Austrian power price zone
08.01.2019Vienna
austropapier, the Association of the Austrian Paper Industry, voestalpine, VERBUND and the Austrian energy exchange EXAA are jointly filing a petition against the German transmission system operator TenneT TSO GmbH to terminate its abuse of its dominant market position.
As long ago as the 1990s, when efforts were being made to create a common European internal power market, Germany and Austria formed a common, functioning, cross-border price bidding zone that would remain in force until October 2018. There have never been any structural grid bottlenecks on the border between Germany and Austria. The technical border capacity is currently up to 10,700 megawatts.
However, the previous common electricity price zone covering Germany and Austria was split on 1 October 2018. Since then, only 4,900 megawatts of electricity have been available for power trading between the two countries through long-term capacities, with additional day-dependent residual capacities.
Petition to terminate the abuse of a dominant market position
austropapier, the Association of the Austrian Paper Industry, voestalpine, the world’s leading technology and industrial goods group, VERBUND, Austria’s biggest power supplier, and the energy exchange EXAA based in Vienna will submit a joint petition to the Higher Regional Court of Vienna against the German transmission system operator TenneT TSO GmbH to terminate its abuse of its dominant market position. Specifically, the four companies refer to the fact that the German transmission system operator is exploiting its position of dominance by trying to remedy grid bottlenecks within Germany through the introduction of congestion management systems at the Austrian-German border. This measure would lead to an anti-competitive distortion of the market as the structural network bottlenecks are not found at the Austrian-German border but within Germany itself. There is also a precedent from 2010 ("Swedish Interconnectors") concerning the interconnectors between Sweden and Denmark, in which the European Commission arrived at precisely this conclusion. Furthermore, the analysis of the economic impact of splitting the power price zone has not been carried out, although this is provided for in EU legislation.
Additional burden for Austria as a business location and breach of EU targets
The unjustified splitting of the previously common German-Austrian market area is leading to additional costs and weakening the Austrian economy. Higher energy prices are causing Austrian industry to become less competitive and weakening households’ purchasing power. At the same time, the restriction of competition is leading to an illiquid Austrian futures market with greater marketing and procurement risks for producers and consumers.
In the first few months alone, the split has already resulted in a significant price difference between the German and Austrian power trading products. Based on current forward market prices, this results in an additional burden of at least €180 million per year for Austrian customers, with a large part of this burden affecting industrial customers, especially in energy-intensive sectors such as the metal, paper, glass and chemical industries. For Austrian household customers, the additional burden currently amounts to around €60 million per year.
Furthermore, the split contradicts the EU objective of creating a common European internal power market. Accordingly, cross-border capacities between European countries should be increased with the aim of being able to offer at least 10% of the installed generation capacity as cross-border capacity. Austria is one of the few European countries that already far exceeds this target. In line with this EU objective, grid capacities have been gradually expanded in recent years to develop the common market area with Germany.
By taking this legal step, the companies are continuing their unbroken commitment to maintaining the common market area and creating the common EU internal power market.
However, the previous common electricity price zone covering Germany and Austria was split on 1 October 2018. Since then, only 4,900 megawatts of electricity have been available for power trading between the two countries through long-term capacities, with additional day-dependent residual capacities.
Petition to terminate the abuse of a dominant market position
austropapier, the Association of the Austrian Paper Industry, voestalpine, the world’s leading technology and industrial goods group, VERBUND, Austria’s biggest power supplier, and the energy exchange EXAA based in Vienna will submit a joint petition to the Higher Regional Court of Vienna against the German transmission system operator TenneT TSO GmbH to terminate its abuse of its dominant market position. Specifically, the four companies refer to the fact that the German transmission system operator is exploiting its position of dominance by trying to remedy grid bottlenecks within Germany through the introduction of congestion management systems at the Austrian-German border. This measure would lead to an anti-competitive distortion of the market as the structural network bottlenecks are not found at the Austrian-German border but within Germany itself. There is also a precedent from 2010 ("Swedish Interconnectors") concerning the interconnectors between Sweden and Denmark, in which the European Commission arrived at precisely this conclusion. Furthermore, the analysis of the economic impact of splitting the power price zone has not been carried out, although this is provided for in EU legislation.
Additional burden for Austria as a business location and breach of EU targets
The unjustified splitting of the previously common German-Austrian market area is leading to additional costs and weakening the Austrian economy. Higher energy prices are causing Austrian industry to become less competitive and weakening households’ purchasing power. At the same time, the restriction of competition is leading to an illiquid Austrian futures market with greater marketing and procurement risks for producers and consumers.
In the first few months alone, the split has already resulted in a significant price difference between the German and Austrian power trading products. Based on current forward market prices, this results in an additional burden of at least €180 million per year for Austrian customers, with a large part of this burden affecting industrial customers, especially in energy-intensive sectors such as the metal, paper, glass and chemical industries. For Austrian household customers, the additional burden currently amounts to around €60 million per year.
Furthermore, the split contradicts the EU objective of creating a common European internal power market. Accordingly, cross-border capacities between European countries should be increased with the aim of being able to offer at least 10% of the installed generation capacity as cross-border capacity. Austria is one of the few European countries that already far exceeds this target. In line with this EU objective, grid capacities have been gradually expanded in recent years to develop the common market area with Germany.
By taking this legal step, the companies are continuing their unbroken commitment to maintaining the common market area and creating the common EU internal power market.
