With its decision of 27 September 2007 the Bundeskartellamt has committed RWE AG to sell significant amounts of electricity capacity totalling 6,300 MW in the coming four years to industrial customers through transparent procedures. In the process RWE will credit its customers with the value of the free CO2 allowances allocated to the capacities sold. With this commitment the Bundeskartellamt was also able to conclude pending proceedings against RWE, in which the latter was accused of abusively passing on opportunity costs from free CO2 allowances in its prices for industrial electricity (see press release of 20 December 2006).

The decision was made possible because RWE, in answer to the Bundeskartellamt’s statement of objections against its controversial pricing for 2005, made an offer of commitment to the Bundeskartellamt and its industrial customers. In detail, RWE will have 46 million MW of electricity offered for sale at sixteen auctions by an independent auctioneer. The form the auctions will take is considerably different from the conventional sale of electricity on the Leipzig stock exchange, which was recently often a subject of criticism among customers. The auction scheme will make it easier for small and medium-sized industrial customers to start up structured portfolio management activities because quantities will be auctioned off in small steps. As well as a base-load product from lignite power stations, the auction will include the sale of a new full-supply product from hard coal power stations.

The President of the Bundeskartellamt, Dr Heitzer, stressed in Bonn that RWE’s commitment takes account of the key points at issue in the proceedings in that the company will not pass on the controversial CO2 opportunity costs in its prices for the auctioned electricity, allowing for a transparent process. “The decision will lead to a quicker, more satisfactory and visible result for the market players than would a lengthy court dispute over a prohibition”.

However, Dr. Heitzer also indicated that the conclusion of the proceedings in no way marked the end of his authority’s dealings with high electricity prices and their structural causes. In its decision the Bundeskartellamt has specifically left open a possibility for it to intervene against RWE’s price strategy beyond the aspect of passed-on CO2 opportunity costs, not least in view of plans by the legislator to tighten price abuse control.

The Bundeskartellamt also confirmed that parallel proceedings against E.ON Energie AG were also producing constructive talks.

The decision is available at www.bundeskartellamt.de.