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Germany

Germany

POLITICIANS UNITE TO PROTECT WIND TARIFFS FROM UTILITY MUTINY

The German federal parliament stormed to the rescue of the country's wind market last month after three utilities -- carrying out their threats of past months -- flouted the law and stopped buying electricity from renewables plant at premium rates. The utility mutiny was countered by a cross section of political parties pledging overwhelming support for the Electricity Feed Law (EFL) in a parliamentary debate in Bonn on May 19. The EFL requires utilities to buy renewables power at rates which recognise its environmental benefits.

"We are pleased and proud that we successfully initiated such a positive debate," says a relieved Uwe Carstensen, chairman of the federal association of renewable energies, BEE. The debate was led by members of BEE's parliamentary advisory group in which all political parties are represented.

In late May, renewables lobbyists were confident that the electricity sector would now be called to order. With wind development running at 30 MW a month and about 750 MW now in the ground, Germany is currently the most active wind energy market in the world. It is this very success which seems to be driving utility resentment of the EFL.

The German utilities association, VDEW of Frankfurt, started the year by advising that premium payments for renewables were on a short lease of life. Last month the matter came to a head when three utilities each chose a single renewables victim and cut their EFL rates. Two of the victims were hydro plant operators, while the third, an asphalt works at Geesthacht, near Hamburg, is the owner of an Enercon E 40 wind turbine.

Supporting this deliberate flouting of the law, VDEW told the public that rates of pay for the three renewables suppliers would be those agreed between independent industrial generators and utilities in 1994, rates "which should also apply to electricity from renewable energies." These are just DEM 0.09/kWh, compared with the 1995 EFL rate for wind energy of DEM 0.1728/kWh.

The VDEW claims that only by provoking individual renewables operators into taking utilities to court can it challenge the EFL. It believes the law contravenes the German constitution, though this concern was not raised at the time the EFL came into force in January 1991.

The EFL is now up for political review and there has been every indication that it will be renewed for a five year period. Faced with this prospect, the utility establishment barely hesitated before stepping outside the law. But the protest over the powerful VDEW inciting its members to break the law has been so great that the three utilities spearheading the attack are close to being forced to backtrack.

Social Democratic member of parliament Hermann Scheer has been particularly articulate in his condemnation. Referring to the utilities as the guilty party, he says they have no cause to act like downtrodden victims because parliament is protecting the wind and hydro industries and demanding that the electricity sector comply with the law. If that is the way the utility sector feels, he says, "They have moved so far offside they can no longer hear the referee's whistle. The VDEW is behaving as though it's a state within a state giving itself the powers to decide whether and under what conditions it will observe the law."

Scheer says the chairman of VDEW, Horst Magerl, even admitted he was aware how far the association had gone by describing the actions of the three utilities as the "gentlest possible violation of the law." Scheer maintains that if the electricity sector can demand police action and public prosecutors to enforce the Atomic Energy Law, the same support should be available to the EFL. "Utility Board members can also be taken into detention," he comments.

The three utilities leading the attack on the EFL each represent a grouping within the electricity sector. Badenwerk is one of Germany's nine so-called Verbund utilities which own the high voltage grid. The second is a municipal utility, Stadtwerke Geesthacht, owned 75.1% by the district councils and 24.9% by the large Schleswag utility. The third is the regional Kraftübertragungswerke Rheinfelden (KR) which is owned 15% by Badenwerk, but with the major ownership stake held by Swiss companies. While Badenwerk and KR picked on hydro operators, the Stadtwerke Geesthacht chose Hamburg Asphalt-Mischwerke (HAM) and its Enercon E40, in operation since last December.

In the two hydro cases the utilities have simply stopped paying the EFL rates of DEM 0.1536/kWh, reducing them by more than half and in one case backdating the decision to January 1. Richard Keil of Wasserwerke Bronnbach says: "I have made large investments in the plant over the last four years but I can't operate economically at these rates."

Legal wool

The wind case is more complicated. The Stadtwerke Geesthacht has, it appears, tried to pull the legal wool over the eyes of the asphalt company. Until now HAM bought electricity for its works through a purchase contract with Stadtwerke Geesthacht and sold power from the Enercon E40 -- at higher EFL rates -- under a separate contract. This was to much for Stadtwerke which, with the backing of VDEW, decided that the wind turbine's electricity should be used by HAM before it started buying more power from the grid. The EFL rate would only be applicable, decided the utility, for any surplus power fed into the grid by the wind turbine.

Fortunately for HAM, the Stadtwerke has been stopped in its tracks by the Schleswig-Holstein Electricity Tariff Supervisory Office. Bernd Löwner from the office categorically states: "This can't be done. There are two quite separate contracts -- one for electricity supply from the turbine, the other a purchase contract -- both of which have to be honoured."

Meanwhile, the economy minister of Baden-Württemberg's, Dieter Spöri, is threatening to bring a court case against Badenwerk and KR for misuse of their monopoly status by disregarding the EFL.

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