Germans lost and fearful in the free market

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Competition and green power marketing have hit the German electricity consumer with a vengeance. Some 60 companies now offer green tariffs, along with the feel-good factor associated with using clean power. Since August large utilities have been attempting to woo customers away from their current suppliers with attractive price offers. But so far the consumer has shown little interest in switching supplier, whether to save money or to go green. Utilities, green traders and market analysts alike are now searching the German soul for the reason why.

A handful of green power marketers have been touting their wares in Germany for many months, targeting mainly household but also commercial customers with offers of clean electricity at prices up to a third higher than normal tariffs. Customers have responded sluggishly. In a recent article in the Die Woche newspaper, one source estimates that the main green traders have just 4000 customers under contract. Naturstrom of Düsseldorf says that by the first week of September it had 1007 customers, of which 76% are receiving power. Another green trader, WER of Bad Homburg, says it has issued 1900 contracts. And Naturenergie, based in Grenzach-Wyhlen, puts its customer total at 600.

The lack of interest in switching supplier is not restricted to green power, however. Traditional utilities with huge advertising campaigns for cheaper products-EnBW with "Yello Strom," RWE Energie with "PrivatStrom" and Bayernwerk with "PowerPrivate" and "PowerFamily"-have had no more success than the green marketers. The products are advertised as substantially cheaper than current tariffs and consumers are informed that they can save up to DEM 500 (EUR 255) on their household power bills. But so far with little success. One huge utility, RWE Energie, has signed up just 1000 new household customers, despite its massive advertising campaign in August to which 100,000 people responded with enquiries.

Thoroughly confused

The problem has very much to do with the way the advertising campaigns have been conducted, says Dirk Ziems of IFM Wirkungen und Strategien, a market researcher. "The central factor-the customer-has been forgotten," Ziems says. IFM drew its sobering conclusion following interviews with 60 consumers from a variety of backgrounds. "Apart from the widely greeted announcements on price cuts, most electricity customers are thoroughly confused," says Ziems. They are faced with a multitude of green tariffs offered by utilities and by nearly two dozen green power marketers, both regionally and nationally and each with its own conditions and green policies. Utilities are also offering traditional power at prices low enough to make customers feel that for decades past, they have been paying through the nose.

small print

At the same time, consumer organisations are warning customers to compare working prices, standing charges, day and night prices, lengths of contracts, to check when the contract begins, who pays for the last meter reading, whether the meter has to be replaced, whether the old utility has to be informed and, most importantly, not to forget to read the small print. To add more confusion, energy consumers association Bund der Energie Verbraucher is urging consumers to switch supplier. This is the only way to apply more pressure on utilities to keep cutting their prices, the group says.

"Consumers are confronted with questions they have never before had to consider," Ziems says. How does my electricity get to me in Cologne from a utility in Baden-Württemberg? What happens if there is a technical problem? "Consumers do not like the idea of being without their microwave or washing machine or not being able to shut the garage door," says Ziems. As one survey respondent put it, without electricity, "all I can do is sit in my cold, dark apartment and wait." The feeling of being part of a community supplied by the local municipal utility, too, makes it hard for consumers to strike off on their own, adds Ziems.

The national utilities association Vereinigung Deutscher Elektrizitaetswerke has yet to work out its overview of the situation. The association's Uwe Kirsche merely notes, "In England power companies have discovered that customers are not prepared to switch suppliers for a fifteen or twenty percent cut in price but will swap if offered attractive presents-like a new washing machine."

One RWE Energie subsidiary, Emscher Lippe Energie, is testing this concept on a small scale by offering new customers reduced price tickets to the municipal swimming pool, the theatre and a local amusement park.

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