Federal Network Agency initiates proceedings against low-cost electricity providers

Electricity icon image

The costs on the spot market exchange for electricity (EEX) are currently around EUR 170 per MWh.

(Photo: IMAGO/imagebroker)

Dusseldorf Tens of thousands of customers received a letter from their electricity provider at the end of 2021. There they were informed that their prices will increase significantly – in three days. Because they did not warn their customers in good time, the Federal Network Agency has now initiated supervisory proceedings against the two electricity discounters Voxenergie and Primastrom.

Klaus Müller, President of the Federal Network Agency, said on Tuesday: “We are checking whether the companies have made price increases without complying with the statutory notice periods.” Even in phases of a tense market situation, consumers should be able to rely on the fact that they will be informed about contract changes in good time be informed.

Because more and more customers complained, the authority has now started an official investigation. On December 28, 2021, the two low-cost electricity providers sent a letter to their customers and announced that they would increase electricity prices. The new prices should apply from January 1, 2022.

Providers actually have to warn household customers about price changes at least one month before the intended change. For all other consumers it is at least two weeks in advance. Customers can then look for a new electricity provider with a cheaper tariff: in the event of a price increase, they can make use of their special right of termination.

Top jobs of the day

Find the best jobs now and
be notified by email.

For several months, the complaints about the two providers had accumulated massively at consumer advice centers. It was usually about the fact that Primastrom and Voxenergie had increased the agreed consumption price sharply despite the price guarantee.

They often also raised the monthly payment extremely, reports Marion Gaksch, energy law expert at the Bavarian consumer advice centres: “The number of cases reported by the consumer advice centers alone is likely to be several thousand.” They had asked the Federal Network Agency weeks ago to close the two cases check.

Depending on the outcome, the authority can even take regulatory action if there is a suspicion that energy companies are violating the Energy Industry Act. The Federal Network Agency can then prohibit the illegal behavior.

Electricity prices have meanwhile risen to 400 euros per megawatt hour

Instead of filing for bankruptcy, several electricity discounters either stopped delivering to many customers overnight or increased prices and advance payments by more than 500 percent in some cases. The reason for this was the record purchase prices on the energy exchanges.

Thousands of customers have already approached law firms to file class action lawsuits, Handelsblatt reported. The Federal Network Agency also decided in February that the horrendous advance payments from providers such as Rheinische Elektrizitäts- und Gasversorgungs GmbH were not compatible with energy law. “The risk of rising procurement prices must not be passed on to household customers by unilaterally increasing the discounts,” said then-President Jochen Homann about the verdict.

Just a few days ago, the Federal Council proposed that electricity providers must publish the deadlines for purchasing energy. Phillipp Wendt, head of the consumer advice center in Hesse, welcomed the suggestion: “Consumers receive information about price stability and the seriousness of their energy supplier.”

Low-cost electricity providers in particular often pursue a short-term purchasing strategy in order to find the cheapest prices on the market. Otherwise the cheap customer tariffs do not pay off for them. However, the discounter business model has not worked since autumn 2021. The exchange electricity prices have risen massively and have remained at a high level to this day.

>>> Read here: How to find a good electricity contract

Because the global economy recovered much faster than expected after the corona pandemic, the demand for electricity also increased surprisingly quickly. At the same time, supply chain problems, failed coal mines, and delayed projects have at times been short of fossil fuels in the power market.

In November 2021, prices rose to over 400 euros per megawatt hour (MWh) on the Spot Market Exchange for Electricity (EEX). The costs are currently around 170 euros per MWh. For comparison: in the same period a year ago, the same amount cost just 35 euros. Consumers have been feeling the effects of the increased prices for months.

According to the comparison portal Check24, electricity suppliers have already implemented several price increases in almost 700 cases or announced them for the summer. Around 5.4 million households are affected with electricity and around 2.2 million with gas. The price increases for electricity are on average almost 25 percent, for gas even around 54 percent. An end to the record electricity prices is not yet in sight.

More: Low-cost electricity provider: Consumer center sues Stromio

Handelsblatt energy briefing

source site-17