Numerous electricity and gas providers have withdrawn from the market despite contractual agreements and unilaterally stopped supplying their customers. Consumers who have slipped into basic service sometimes have to pay significantly higher prices than existing customers, as a current study by the vzbv shows…
The vzbv considers this two-tier system to be wrong because it undermines competition and calls on politicians to take action. More transparency and more supervision are needed.
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??Some electricity and gas providers have obviously opted for a short-sighted business model and have not lived up to their responsibility to their customers. But that was also possible because the transparency obligations and the regulation were not sufficient. Now consumers shouldn’t have to foot the bill for these dubious business models and poor market regulation. Politicians must make consumer protection on the energy market more crisis-proof,?? says Thomas Engelke, Head of the Energy and Construction team at vzbv.
The day before yesterday, Economics Minister Robert Habeck announced legal changes to tackle the problem of providers exiting the market at the expense of consumers.
Politicians must review tariff increases
After the first bitter pill from some electricity and gas suppliers, consumers were then confronted with exorbitant price expectations from basic suppliers.
The vzbv considers a distinction between new and existing customers in the replacement or basic service to be legally inadmissible, dangerous for fair competition and also incomprehensible.
A current study by vzbv’s Energy Market Observatory shows that some ?? but not all Basic electricity suppliers have introduced significantly more expensive tariffs for new customers. Consumers now have to incur annual additional costs of between 889 euros and 1654 euros compared to existing customers. This means that new customers with an average electricity consumption (3,500 kWh) pay more than twice as much as existing customers with two energy suppliers (Frankfurt/Main, Leipzig).
The study shows that there is obviously another way. In two cities (Bremen, Stuttgart), the basic electricity suppliers have lowered their prices slightly. They remained almost stable in seven cities (Berlin, Hamburg, Munich, Düsseldorf, Essen, Hanover, Nuremberg). The basic service tariffs of the 14 most populous cities in Germany were examined from January 12 to 17, 2022.
??The suspicion is that some providers want to unilaterally pass on their costs to new customers. The excessive tariffs are incomprehensible to us,” says Engelke.
A similar picture emerges in the gas sector. In half (Berlin, Cologne, Frankfurt/Main, Leipzig, Dortmund, Essen, Dresden) of the 14 cities surveyed, the basic gas suppliers have introduced a separate tariff for new customers. For an average household (20,000 kWh), this results in additional costs for new customers of 1,118 euros to 3,802 euros per year.
The vzbv calls on the federal government to review the tariff increases of the basic suppliers and to take action against the providers in the event of abuse.
The vzbv rejects plans to legalize such tariff increases by amending the Energy Industry Act. Unregulated prices for basic services should not skyrocket. Should the federal government decide to do so, protective mechanisms such as time limits, price caps and an obligation to justify the supervisory authorities would have to be introduced in order to rule out arbitrariness and uncontrolled growth.
Two-tier system undermines competition
From the point of view of the vzbv, it is to be feared that a two-class system in the basic supply will further reduce the willingness of consumers to switch and thus undermine functioning competition on the energy market. The general criticism currently being expressed of consumers (??Bonushopper??), who have often changed providers, is misplaced.
??Consumers switching providers are fueling competition in the energy market. This ultimately leads to lower prices for everyone. It would be wrong to abandon the approach of a liberalized energy market. Consumers must be able to switch and politicians must ensure that suppliers meet their obligations. Dubious companies should be looked at more closely and not even act on the market. Hundreds of thousands of consumers now have the damage, says Engelke.
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