Tougher action against dubious energy suppliers

Electricity costs in Germany

Many customers have to take a closer look due to the high electricity and gas prices.

(Photo: dpa)

Berlin Federal Minister of Economics Robert Habeck (Greens) wants to ensure better protection for electricity and gas customers against short-term terminations and excessive prices. However, the legislative plans do not go far enough for the Federal Association of Consumer Organizations (VZBV).

In a statement available to the Handelsblatt on a draft law to amend the Energy Industry Act that has not yet been approved by the government, the VZBV calls for more powers for the Federal Network Agency to monitor energy suppliers.

The draft law so far provides for prohibiting the abrupt cessation of supplies by energy suppliers. In the future, the providers should notify the Federal Network Agency of the cessation of delivery three months in advance and inform the affected customers. A violation of this rule should be subject to a fine. In addition, the possibilities of the Federal Network Agency to exclude dubious providers from the market should be strengthened.

From the point of view of Thomas Engelke, head of the Energy and Construction team at VZBV, the intended increased protection of citizens is a step in the right direction. “However, it should be supplemented by stricter controls by the Federal Network Agency,” Engelke told the Handelsblatt.

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Energy suppliers should therefore have to submit an auditor’s certificate to the network agency at regular intervals. In addition, the authority should be obliged to “continuously check” the performance and reliability of the management of an energy supplier and to intervene in the event of deficiencies. The network agency is currently entitled to carry out this check, but there is no obligation to check, the VZBV criticizes.

Stromio or Periwinkle under criticism

With its regulation plans, the Ministry of Economics is reacting to the suspension of deliveries by energy discounters, which has caused many former customers to fall into the so-called replacement supply from the local basic supplier through no fault of their own. These are energy providers with the most customers in a region.

These are obliged to continue to supply customers with electricity and gas if the previous supplier is no longer available, but according to the association they have to buy the energy at high prices. As a result, some of the consumers affected had to pay significantly higher prices for their energy supply than before because many default suppliers had introduced new tariffs for new customers.

Oliver Krischer (Greens), Parliamentary State Secretary in the Federal Ministry of Economics, told the magazine “Capital”: “The fact that around one million gas and electricity customers are terminated within a very short time must not be repeated.” So-called cheap electricity providers such as Stromio or Immergrün had the end of 2021 Delivery ended for all customers – but some of them were only informed after the supply had stopped. The discount providers cited the high raw material prices on the energy exchanges as the reason.

>> Read also: Stromio – How terminated customers get their money

The draft law now envisages prohibiting tariff splitting in the basic service. However, under certain conditions, basic suppliers in the alternative supply should be allowed to charge higher prices than in the basic supply. Consumer advocates strictly reject this. “Different prices punish the affected customers and not the dubious energy suppliers,” said VZBV expert Engelke.

The association also fears that higher prices in the replacement supply could lead to a “less willingness to switch” on the part of consumers and thus less competition among providers. “Especially under the current market conditions, however, competition between providers is particularly important in order to ensure freedom of choice and price competition,” says the VZBV statement.

Because even when the markets are tense, it is evident that households can save “significantly” by switching to a cheaper provider of electricity and gas. However, this will only work if consumers do not have to fear having to pay a “penalty price”.

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