Environment & Energy
Related: About this forumEU probes Germany's energy discounts for industry
EU probes Germany's energy discounts for industryTHE ASSOCIATED PRESS
BRUSSELS -- The European Commission formally launched an investigation Wednesday to find out whether energy price cuts granted to industrial clients in Germany is a hidden form of state aid.
Large electricity consumers were exempt from paying around (EURO)300 million ($390 million) in network charges last year alone - an arrangement that may put competitors in other member states at a disadvantage, said the Commission, which is also the 27-nation bloc's antitrust watchdog.
Germany exempted its industry from the charge to keep rising electricity costs in check as the country switches from nuclear power to renewable energies over the next nine years. Industry lobbies complained the country's rising energy costs would undermine competitiveness.
The charge is rolled over to small German electricity consumers who pay more because of the industry exemption. A similar scheme also exempts industrial consumers in Germany from a surcharge financing the expansion of renewable energies, which has sharply risen over the past years as the share of wind, solar and biomass power topped 25 percent of the country's electricity production.
In Berlin...
Read more here: http://www.miamiherald.com/2013/03/06/3269663/eu-probes-germanys-energy-discounts.html#storylink=cpy
dipsydoodle
(42,239 posts)Renewable energy goes to industry because domestic consumers would be up in arms about the price. I hadn't realised that industry needs subsidies to use it.
Whilst Germany has the best of intentions regarding renewables their plans seem somewhat awry.
kristopher
(29,798 posts)Industry has been getting subsidized energy for decades - people are just now catching on because INDUSTRY started bitching about having to share in the actual cost of the energy they are using - and now, the chickens are coming home to roost as a result.
So far more than 50% of renewable capacity is owned by individuals and local communities, and that is lower than it will eventually be. In a distributed grid industries are likewise expected to become far more involved in energy production, so this is hardly unexpected. They just want to keep getting their subsidies.
It seems like you are cheering on the present system of centralized fossil fuels; that can't be true, can it?
dipsydoodle
(42,239 posts)and I'm not supporting continued use of fossil fuels either. I'm pointing out the facts of life. I do believe they're cynical on the subject of nuclear. If they were serious they wouldn't import nuclear generated energy from France and the Czech Republic.
kristopher
(29,798 posts)You made 2 assertions, both incorrect:
Renewable energy goes to industry because domestic consumers would be up in arms about the price.
- Renewable energy goes to everyone and consumers are not "up in arms" about the price".
I hadn't realised that industry needs subsidies to use it.
- They don't "need" subsidies to use it. They've enjoyed subsidies on energy for decades and are now losing those subsidies. They don't "need" them any more than Exxon needs its subsidies.
dipsydoodle
(42,239 posts)muriel_volestrangler
(101,321 posts)German reporting of the story:
In latest available figures dating back to 2011, some 202 German firms, including steelmakers and the chemicals industry, were exempt from paying network charges.
For 2012, the government estimated the cost reductions to amount to 440million euros ($573 million), out of which full exemptions alone were expected to be worth 300 million euros. The reductions are rolled over to ordinary Germans' electricity bills.
The probe was based on complaints from consumer advocacy groups, energy companies as well as from citizens alleging the exemption constituted unlawful state aid, the EU regulators said.
http://www.dw.de/eu-investigates-german-industrys-energy-discounts/a-16652605
kristopher
(29,798 posts)And what are they correct about?
muriel_volestrangler
(101,321 posts)kristopher
(29,798 posts)muriel_volestrangler
(101,321 posts)kristopher
(29,798 posts)I went so far as to explain why. Which is far more than you've done.
muriel_volestrangler
(101,321 posts)and helpfully put the relevant bit in bold.
kristopher
(29,798 posts)FBaggins
(26,748 posts)though that's not unreasonable in any other industry where larger volume purchases result in preferential pricing.
But there wouldn't be an investigation of unfair state aid unless the discount were larger in Germany than the rest of the EU.
kristopher
(29,798 posts)"not unreasonable in any other industry where larger volume purchases result in preferential pricing"
In the field of energy the act of discounting the cost to heavy users is part of a cycle that drives increased energy consumption and large system inefficiencies. It is tied to the fact that most utilities (here and abroad) are reimbursed on a cost plus basis. This gives an additional incentive for expansion.
A utility is motivated to build more capacity than they actually need, then they are motivated to discount the unused capacity in order to derive some sort of revenue. This promotes inefficient industrial expansion as heavy industry relies on the subsidized power rather than seeking efficiencies in their processes.
Raise the cost of power and the formula changes regarding how much it is worth spending on efficiency.
It is a common part of centralized thermal generation, and it is something we need to address if we are going to change the trajectory of energy use.
quadrature
(2,049 posts)where I live, my understanding is.
utility gets an expected ROI,
plus has a duty to make an effort to supply
electricity too all customers
at a reasonable reliability.
kristopher
(29,798 posts)They get a set return on whatever the need to spend to provide service. The amount is set by a semi-governmental body with names such as Public Service Commission of Public Utility Commission.
The rate is usually around 6%. The primary tool the utility has for expanding profits is to expand the size/cost of their facilities.
FBaggins
(26,748 posts)There is a perverse incentive involved and I agree that it needs to change if our goal is to meet targets by using less electricity and not just producing it in a cleaner fashion. But that's not really the point of the post.
Regardless of profit model, people who buy something by the pound always pay more than people who buy that thing by the ton - but that was just to point out that Germany is hardly unique in this regard.
The real point was that in order for the EU to be complaining... the pricing discount had to be much greater than in the rest of the EU. That's it's something more than a volume discount - it's an additional cost to the public (through taxes).
Yo_Mama
(8,303 posts)There really is a big energy subsidy to the German companies, but that is a choice Germany has made.
If the costs of the Energiewende were divided equally among users, the big German industrials would be paying much more (briefly - then they'd shut down their plants) and the individual user would be paying less. But the Energiewende itself would be unaffordable to the society as a whole, because the destruction of industry would be so great that it would take the German economy down.
You could also argue that it is "unfair" for French companies to be benefiting from lower power rates from nuclear power, or Polish companies to be benefiting from lower costs from coal power, relative to Germany.
If a country wants to do what Germany has done, a country is going to spend a lot of money and have much higher electricity prices. How a country provides for that extra spending is a public policy choice.
For example, if this court case should go against Germany, Germany could simply pay the extra energy costs directly from the government, financed by higher taxes.
kristopher
(29,798 posts)That is highly unlikely. What is far more likely is that they will increase energy efficiency dramatically. I'd also take exception to the word "much" in your phrase "paying much more".
quadrature
(2,049 posts)kristopher
(29,798 posts)If someone who is paying 80% less than residential retail has to start paying 60% less than residential retail, is that high? Who might think it is good? Who might think it is bad?
I could go on using the themes in post 2 and 8 above, but I suppose you get the drift of my thinking. BTW the percentages above are for illustrative purposes only.