Germany proposes regulator for gas and power networks

Germany's government proposed on Wednesday the creation of a new regulatory authority to oversee access to gas and electricity networks, bringing the country into line with a long-standing European Union demand. Economy Minister Wolfgang Clement told a news conference the government hoped regulation would eventually lead to lower prices for consumers, but warned against over optimism saying an impact was only likely from 2006.
He noted that network costs only account for around six cents of the average 17 cents per kilowatt hour cost of electricity in Germany.
It had taken Norway 10 years to reduce network costs by 20 percent, he added.
The legislation must be adopted by both German houses of parliament to become law and several opposition controlled states have already signalled they want changes, placing a question mark over the government's targeted 2005 start date.
The opposition controls Germany's upper house, composed of representatives of the country's 16 states.
Clement rejected their call for network operators to submit price increase plans for prior approval - which is the case now at state level - saying that with 1,700 network operators in Germany the demand was unrealistic.
Instead the government's aim was to promote benchmarking of costs to make it easier for regulators to conduct spot checks.
"Network operators which have higher than average costs will have to justify this to the regulator," Clement said.
Full details of the government's plans will not be available until the beginning of September, when it will release five pieces of secondary legislation that concern network access and pricing for both gas and electricity markets, as well as on transparency.
The transparency regulation will make it possible for consumers to see on their bills whether their electricity has come from nuclear, coal, gas or renewable energy sources.
Clement said he had no evidence that network operators were seeking to raise prices in advance of the new regulations, describing tariff changes announced by power group Vattenfall Europe as "an isolated case" which was being investigated by Germany's anti-trust authority.
The anti-trust authority will be in charge of monitoring price developments until the new regulator is set up, he said.