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kristopher

(29,798 posts)
Wed Mar 6, 2013, 06:05 PM Mar 2013

EU probes Germany's energy discounts for industry

EU probes Germany's energy discounts for industry

THE 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
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EU probes Germany's energy discounts for industry (Original Post) kristopher Mar 2013 OP
This is almost tragic farce dipsydoodle Mar 2013 #1
That is a really peculiar spin you are putting on this information kristopher Mar 2013 #2
I'm not spinning anything dipsydoodle Mar 2013 #3
I'm afraid I don't see where you pointed out any facts. kristopher Mar 2013 #4
Some odd notes here dipsydoodle Mar 2013 #5
No, they're correct muriel_volestrangler Mar 2013 #7
Who is "they"? kristopher Mar 2013 #9
The assertions, that you called 'incorrect' (nt) muriel_volestrangler Mar 2013 #10
Those assertions are incorrect. kristopher Mar 2013 #11
Well, you would say that, wouldn't you? muriel_volestrangler Mar 2013 #12
Not only do I say that kristopher Mar 2013 #13
I quoted the news report muriel_volestrangler Mar 2013 #14
An act that totally fails to support your claim kristopher Mar 2013 #15
You're correct that industry frequently gets preferred pricing FBaggins Mar 2013 #6
I'm not sure I agree with that reasoning kristopher Mar 2013 #8
'cost plus', do you have a cite for that? quadrature Mar 2013 #18
Those are the same thing kristopher Mar 2013 #22
That's fine FBaggins Mar 2013 #19
Basically coming from French companies Yo_Mama Mar 2013 #20
We can always depend on you to provide balance with industry views kristopher Mar 2013 #21
so high electricity prices are good, or bad? nt quadrature Mar 2013 #16
"high" is relative, "good or bad" is subjective kristopher Mar 2013 #17

dipsydoodle

(42,239 posts)
1. This is almost tragic farce
Wed Mar 6, 2013, 06:27 PM
Mar 2013

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)
2. That is a really peculiar spin you are putting on this information
Wed Mar 6, 2013, 06:37 PM
Mar 2013
"Renewable energy goes to industry because domestic consumers would be up in arms about the price."

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)
3. I'm not spinning anything
Wed Mar 6, 2013, 06:47 PM
Mar 2013

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)
4. I'm afraid I don't see where you pointed out any facts.
Wed Mar 6, 2013, 07:01 PM
Mar 2013

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.

muriel_volestrangler

(101,321 posts)
7. No, they're correct
Wed Mar 6, 2013, 09:04 PM
Mar 2013

German reporting of the story:

As Germany switches from nuclear power to renewable energies, the government in Berlin has exempted so-called energy-intensive industries from paying charges for maintenance of the electricity network. Industry lobbies had complained that the country's rising energy costs, brought about by massive investments in green energy, undermined the competitiveness of industries that use a lot of energy.

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

FBaggins

(26,748 posts)
6. You're correct that industry frequently gets preferred pricing
Wed Mar 6, 2013, 07:53 PM
Mar 2013

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)
8. I'm not sure I agree with that reasoning
Wed Mar 6, 2013, 09:10 PM
Mar 2013

"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)
18. 'cost plus', do you have a cite for that?
Thu Mar 7, 2013, 02:15 AM
Mar 2013

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)
22. Those are the same thing
Thu Mar 7, 2013, 03:11 PM
Mar 2013

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)
19. That's fine
Thu Mar 7, 2013, 07:02 AM
Mar 2013

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)
20. Basically coming from French companies
Thu Mar 7, 2013, 08:40 AM
Mar 2013

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)
21. We can always depend on you to provide balance with industry views
Thu Mar 7, 2013, 03:04 PM
Mar 2013
"the big German industrials would be paying much more (briefly - then they'd shut down their plants"

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".


kristopher

(29,798 posts)
17. "high" is relative, "good or bad" is subjective
Thu Mar 7, 2013, 01:33 AM
Mar 2013

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.

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