After price shocks and layoffs: This is how the federal government wants to better protect electricity customers in the future

Created: 01/20/2022, 12:37 p.m

Many electricity customers are currently paying far too high prices.

Politicians have now announced that they will react.

© Hauke-Christian Dittrich/dpa

Terminated contracts, stopped deliveries, price jumps - the turbulence on the electricity market is currently causing many consumers a hard time.

Now the federal government wants to slide in between.

Berlin - To protect against extreme price jumps in electricity, Federal Consumer Protection Minister Steffi Lemke (Greens) has announced that new rules will be examined.

"The federal government is monitoring the behavior of market players very closely and is examining possible regulatory steps," said Lemke of the German Press Agency in Berlin.

The consumer centers have already sent several warnings and announced more.

"We are currently dealing with price surcharges that are driving up the price of electricity to up to 90 cents per kilowatt hour," said Lemke.

"This can in no way be justified by what is happening on the market." Economics Minister Robert Habeck (Greens) had previously announced that the liberalized gas and electricity markets would be reviewed.

Electricity contracts: Unilateral terminations partly illegal

The background is that many low-cost providers have experienced turbulence and have canceled thousands of contracts.

In view of the increased prices for electricity and gas on the exchange, they are often unable to meet their obligations to cover their costs due to a lack of long-term contracts.

The energy expert of the Federal Association of Consumers, Thomas Engelke, told the dpa: "In spite of contractual agreements, numerous electricity and gas providers have withdrawn from the market and unilaterally stopped supplying their customers."

Lemke emphasized: "Recently there have been mass cancellations of electricity contracts, some of which are apparently illegal." Consumer advice centers provided comprehensive information on their websites and also provided sample letters for claims for damages.

Engelke said: "The good news is: Nobody has to be afraid of sitting in the dark or of having to freeze." If low-cost providers have stopped delivering to their customers, they automatically end up with the so-called basic suppliers in the respective municipality.

However, according to Engelke, the basic suppliers then demanded in some cases completely inflated prices from the new customers.

"This two-tier system undermines competition."

Eon CEO is upset

Leonhard Birnbaum, CEO of the energy company Eon, was annoyed by the behavior of the electricity discounters. "They gave up the customers to the basic suppliers, who are now ensuring the delivery, and stole their responsibility," he told the dpa. Existing customers often have to pay extra for new customers. "You have to think about new rules so that such behavior in the interests of consumers is no longer possible."

According to Lemke, a “certain surcharge” for new customers is to be accepted if consumers fall into the replacement supply from the default supplier and the latter then has to buy electricity more expensively in the short term. "But I think a tripling or similarly high surcharges are absolutely disproportionate," said the Green politician. In order to examine possible regulatory steps, "we will also speak directly to the energy industry," said Lemke. "We will not allow it to be dumped on consumers if cheap electricity providers go bankrupt or terminate contracts en masse."

A spokesman for the Federal Ministry of Economics explained on Wednesday: "The price increase is due to several components." In addition to the procurement costs for gas, electricity prices depended on network charges and electricity taxes, among other things.

Check possible changes.

There are still no statements as to which components something needs to be done.

Taxes and duties are not the only issue.

Consumer advocates demand: Politicians must react now

Consumer center expert Engelke demanded: "More transparency and stronger supervision are needed." The fact that some electricity and gas providers have opted for a short-sighted business model is also due to insufficient transparency obligations and insufficient regulation.

"Politicians must make consumer protection on the energy market more crisis-proof." Engelke recommended consumers who have to pay heavily when automatically switching to the default supplier to switch to a cheaper tariff.

"But that's difficult at the moment."

The consumer centers offer advice.

"This is also about possible claims for damages." According to information from the consumer advice centers, there are now seven warnings and one threat nationwide because of the cessation of electricity supplies, the termination of contracts or because of extreme price increases - five of them in North Rhine-Westphalia alone.

"Further warnings are being planned," said a spokesman.