Lignite utility calls for protection

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The largest electricity company in eastern Germany has added its weight to the utility crusade against the country's Renewable Energy Feed-in Tariff (REFIT). VEAG, based in Berlin, last month lodged a complaint with the Federal Constitutional Court against the REFIT legislation, treading the same path that Preussenelektra, Germany's second largest utility, took in May. VEAG chairman Jürgen Stotz hopes for a verdict sometime next year.

The REFIT, which guarantees a fixed price for utility purchases of wind power, is part of Germany's new energy law liberalising the electricity and gas markets, passed in April. VEAG's complaint is directed primarily at the 5% "hardship" clause in the REFIT law.

A utility must pay the premium price for renewable power generated in its traditional supply area up to an amount equivalent to 5% of its sales. Beyond that, the next utility in the supply hierarchy has to foot the bill. Four of VEAG's 12 regional utility customers will, it seems, overstep the 5% hurdle in 1998. VEAG's appeal is an attempt to avoid having to start paying for wind power.

Despite being owned by the major west German utilities, Preussenelektra, RWE Energie, Bayernwerk and others, VEAG is feeling vulnerable in the face of growing wind power generation. Since the unification of Germany its power sales have declined following the collapse of industry in the east. At the same time communal utilities and industry have been building their own power plant. Meantime VEAG has forged ahead with a huge multi-billion mark program of modernising and rebuilding its own lignite power stations.

"The east German energy sector faces extra annual costs of DEM 250 million, although it is our aim to bring down power prices to the west German level as soon as possible," warns Stoltz. The difference between east and west is now about DEM 0.09/kWh. He claims that wind energy pushes out lignite power and threatens jobs in mining, but the expressed policy of the federal government is to maintain the east German lignite industry. The new energy law even places a ring fence around east Germany, ruling out third party access and transmission of independently generated power into the region until 2003, or 2005 at the latest.

VEAG also believes the REFIT contradicts European subsidy rules and intends to take this claim before a German civil court as the first step in the procedure to bring an appeal before the European Court of Justice.

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