Bundeskartellamt plans to take action against RWE Net for charging excessive electricity metering and billing prices

The Bundeskartellamt holds to its plan to prohibit the electricity network operator RWE Net AG, Dortmund, from charging electricity suppliers excessive metering and billing prices in the household and commercial customers sector (see press release of 13.09.2002). An auditor’s report submitted in the meantime by RWE Net has not invalidated this suspicion of abusive practices.  The report certifies losses in cost-accounting for RWE Net based on its current prices which are some of the highest in the sector. In the current view of the Bundeskartellamt the prices which have been charged since 1 January 2002 of 36.00 €/year for single tariff meters and 72.00 €/year for dual tariff meters should be significantly reduced.

RWE’s metering and billing prices should stand comparison with those charged by the comparative company Thüringer Energie AG, Erfurt, (TEAG, E.ON-Konzern), which are 38 % to 48 % lower. There are no indications that TEAG is making losses in its network area. Against this background RWE Net’s losses are difficult to comprehend. The auditor’s report was also unable to invalidate this estimation of the situation. The Bundeskartellamt has considerable doubts that RWE Net has properly allocated the costs to network-related services and electricity distribution.  Another question which needs to be asked is whether RWE Net has exhausted its rationalisation reserves or has sufficiently passed these on to network users in the form of lower prices.

The President of the Bundeskartellamt, Ulf Böge, stated: “The RWE/VEW merger should create significant synergy effects for the companies. If after the merger RWE still demands up to 30.7 % higher metering and billing prices from newcomers, this would be a strong indication that the concern is not assigning such synergy effects to its subsidiary RWE Net and still wants to protect the continuing strong market position of its sister distribution company RWE Plus with household and commercial customers (more than 95% market share) from competition. The abusive practices of leading electricity companies would harm competition for household customers which has already been weakened by the insolvency of the second and fourth largest household customer suppliers, ares and Riva. This would squeeze out further newcomers and deter companies wishing to enter the market from doing so."

RWE Net now has an opportunity to comment on the concerns expressed by the Bundeskartellamt in writing and in a public hearing on 13 February 2003.

Background:

The object of the proceedings are those prices which RWE Net charges for network-related metering and billing services (purchase, installation and maintenance of meters, commercial services such as meter-reading, collection). These affect competing electricity distributors supplying load profile customers (households, commercial sector, agriculture) in the RWE area. Against the principles of unbundling over 50% of these services are provided by its sister distribution company RWE Plus as a service for RWE Net.