Anguish in Aachen

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The town council of Aachen has listened carefully to arguments in support of renewable energy. It has understood that generation of electricity from fossil fuels has many hidden costs -- the cost of pollution and the resulting damage to the environment and human health being the greatest. If these costs -- or some of them -- are to be avoided in the future, reason the councillors, it would be financially sensible to stimulate the use of renewables now. And with more use of renewables, their price would fall, making them even more attractive.

Aachen is not a place for talk and no action. By mid-1993 a communal solar and wind energy support programme was in place, requiring the municipal utility, Stawag, to pay price of DEM 2.0/kWh for photo voltaic power and DEM 0.30/kWh for wind power. The standard wind power rate in Germany is just over DEM 0.16/kWh. The cost of this programme would be passed on to consumers in slightly higher electricity prices, in the best tradition of ensuring that polluters pay for their sins. Aware that the scheme might be frowned upon from above, in April last year Aachen councillors obtained approval for the plan from the Tariff Supervisory Office (TSO) of the state government of North Rhine Westfalia (NRW).

And that was about as far as it got. At this point, the Association of Electricity Utilities, VDEW in Frankfurt, got wind of the scheme, so to speak. The wheels of opposition were immediately set in motion. Despite the initial agreement of the TSO, NRW's economy minister, Günther Einert, stepped in and blocked the scheme, electing in October to commission a study from Ulrich Immenga, head of law at the University of Göttingen.

Immenga chose to look at both the federal electricity tariff regulations, amended from 1990, and the Electricity Feed Law (EFL), which came into force on January 1, 1991. His conclusions, however, were apparently not those which minister Einert and friends had been seeking.

What the law says

The EFL sets a minimum price to be paid for electricity from renewables, but no maximum limit. The tariff regulations say that renewables must be paid for at the rate of the long term costs avoided by the utility -- the utility is able to save money because it can reduce its use of other plant, and the need to buy fuel for them. Even more importantly, this clause is followed by another which accepts that power purchase contracts paying more for renewables than the avoided cost are also acceptable. But, as Immenga points out, the tariff regulations also demand that utilities provide as secure a supply as possible, at the most reasonable price possible. Not only are utilities required to cope with this teaser, they must also keep pollution to a minimum -- and environmental protection has its price. All these factors have to be balanced in an energy policy.

Finding a middle path is difficult, but Immenga contends there is a precedent in German law which achieves just this -- the infamous kohlepfennig levy. A levy of around DEM 0.02/kWh is applied to all electricity prices in Germany, officially to cover the cost of "securing energy supply." In effect the levy almost amounts to the 8.5% surcharge on electricity prices to pay for keeping Germany's expensive coal plant in operation -- the kohlepfennig levy. Immenga argues that if two pfennigs is an acceptable price to pay for security of supply, then it must also be an acceptable price for protecting the environment. The Aachen plan would only have added about DEM 0.06/kWh to electricity prices.

The TSO now claims, however, that Immenga is misinterpreting the tariff regulations which, it claims, only allow for higher payments for renewables if these are directly connected to doubt over the avoided costs likely to be achieved by the utility. TSO's contention is hardly convincing, though. When the tariff regulations were drawn up in 1989, opponents argued strongly against including a clause which allowed open-ended payment for renewables. They lost the argument and the clause remains. In which case, it would seem that Immenga's interpretation is the right one.

Back in Aachen, the Conservative CDU leader of the town council, Heiner Berger, has by now got decidedly cold feet over the whole scheme. He is refusing to allow the Aachen municipal utility to apply to the TSO for permission to raise its electricity prices to pay for the renewables premium. Until it does so, the issue cannot be referred to the legal process for adjudication -- so what the tariff regulations really mean remains a mystery. The more enlightened members of Aachen town council, however, are continuing their political lobbying for renewables to be paid a price which reflects their true worth. They are enthusiastically backed by the Aachen Association for the Promotion of Solar Energy -- the organisation which mooted the plan for higher tariffs for renewables in the first place.

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