VERBUND customers profit to full extent from reduced power grid tariff

1/17/2005Wien

Lowering of grid tariff causes annual costs of more than 20 million euros for VERBUND subsidiary APG - VERBUND customers benefit to full extent - Austria’s extra-high-voltage tariffs are among the lowest in the EU.

Hit by the grid tariff cut decreed by E-Control is VERBUND subsidiary VERBUND-Austrian Power Grid AG (APG), which is expecting a drop in earnings of more than 20 million euros, matching a tariff cut of 11 %.

Besides the fall in profits, APG must also bear the costs for adjustment measures needed in bottleneck management. This means another indirect tariff cut totalling 10 million euros. The adjustment measures causing additional costs are necessary to prevent overloading in Austria’s extra-high-voltage grid that no longer complies with the latest requirements. A steep rise in these costs is expected.

Due to consistent unbundling efforts pursued within VERBUND Group, VERBUND customers benefit to full extent from the latest grid tariff cuts. ‘Unbundling’ means the corporate law specific separation of production and grid by which cross-subsidisation between individual group subsidiaries can be ruled out. This guarantees full transparency of cost and earnings, which is vital for an easily comprehensible way of setting power tariffs. This is because production prices are market-based while grid tariffs are regulated due to power grids representing a natural monopoly.

Grid access prices for the Austrian extra-high-voltage grid, majority-owned by VERBUND-Austrian Power Grid AG (APG), were already low in European comparison in the first place. The latest tariff cut has placed transport costs in Austria’s extra-high voltage grid among the lowest in the EU.