Utility political move hits customer prices

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Regional utility EWE in the windy far north of Germany has been given permission to raise its electricity prices in compensation for the extra cost of paying premium rates for wind power. The Lower Saxony Supervisory Office authorised the increase -- averaging 3% -- based on documents presented by the utility for the amount of wind power it buys.

Germany's wind energy association, the Bundesverband Windenergie (BWE), has protested strongly. It says that under the law governing the national Renewable Energy Feed in Tariff (REFIT), the EWE utility should have passed on its deficit to the next utility in the hierarchy -- and not to electricity customers. The Electricity Feed Law stipulates that if sales of wind power reach more than 5% of a local utility's overall sales, the costs of meeting the REFIT fall to its parent company. In this case the utility is Preussenelektra, which has large reserves of cash. EWE says wind will reach 10% of its sales in 1998.

BWE points out that EWE has already pushed through a 5% price increase, in 1995, again blaming the cost of paying for wind. Since then, however, the law has been amended so that Germany's cash rich utilities should pay for the costs of clean energy, not customers. The EWE is in a position to reduce rather than raise its power prices, comments BWE chairman Peter Ahmels. "This was the aim of the change to the REFIT legislation. Trying to cash in twice from electricity customers is not acceptable," he says.

Questionable claim

His organisation also questions whether the additional costs of wind generated power are as high as EWE claims. The REFIT paid to wind turbine operators amounts to DEM 0.17/kWh. EWE says this is DEM 0.09/kWh more than it would have to pay for power from elsewhere. The implication is that the utility is paying only DEM 0.08/kWh for electricity from Preussenelektra -- electricity it is selling on to customers for well over DEM 0.20/kWh.

This difference cannot be explained by the costs of maintaining the distribution grid, says the BWE. Ahmels suspects that in Germany's new, more competitive power landscape, household and other tariff customers are having to finance price cuts to industrial customers -- and wind energy is being abused as a cover-up for this cross subsidisation. The BWE intends to demand from the Lower Saxony Price Supervisory Authorities a re-examination of EWE's claim -- and an examination of the utility's potential for cost-cutting.

Schleswag tries it on

Meantime, the Schleswag regional utility, owned 65.3% by Preussenelektra and based about 100 kilometres west of EWE, has complained that its reduced operating profits of DEM 40 million in 1997 are all due to having to pay for wind energy. Its overall profits, however, rose from DEM 64.2 million in 1996 to DEM 81.2 million last year and it paid a 20% dividend to Schleswag stakeholders: Preussenelektra and 11 Schleswig-Holstein rural districts.

BWE says that with less than 100 MW new wind power on line in Schleswig Holstein in 1997, the increased cost of the REFIT cannot amount to more than DEM 10 million. The reasons for the utility's poor performance must be sought elsewhere, it adds. Moreover, if Schleswag took advantage of the law and required Preussenelektra to meet all REFIT payments for wind power above the 5% penetration limit, it could reduce a loss to a profit.

According to BWE, the relief afforded to Schleswag by making Preussenelektra pay its due bills should amount to DEM 50-60 million. As at EWE, wind energy accounts for about 10% of Schleswag sales. Unlike in Lower Saxony, however, the Schleswig Holstein Supervisory Price Office has not approved applications by Schleswag to increase its electricity price to customers.

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