Amendments bring overall relief to system charges

23 May 2019 | newsletters

The Austrian regulatory authority E-Control is responsible for ensuring an equal energy market and a fair market price. Each year E-Control reviews and defines the system charges for the use of electricity and gas networks on all network levels. Article 12(2) of the E-Control Act sets out the system charges. The system charges compensate the grid operator for the costs of setting up, expanding, maintaining and operating the grid system.

This article reviews the 2019 amendments of two ordinances – the System Charges Ordinance for electricity and the Gas System Charges Ordinance.

Electricity

In general, the Austrian system charges for electricity have developed in a stable manner. However, there are certain regional differences. To explain the significant regional inconsistencies, it is important to discuss the major effects on the system charges for electricity, which are considered in the System Charges Ordinance 2019. The system charges are affected by several major factors, including a new regulatory period, capacity congestion and network loss charges.

New regulatory period
On 1 January 2019 the new regulatory period began. For a long-term stable regulatory approach, the regulatory authority must consider:

  • consumer protection;
  • investment and innovation security for regulated companies;
  • the reliability of supply and quality of service;
  • the transparency of the system;
  • a balanced treatment of regulated companies;
  • whether the system will be generally accepted by all concerned interest groups (eg, customers, employees and owners); and
  • legal stability.

Taking the abovementioned criteria into account, the authority reviewed the cost calculation of every distribution system operator that had a feed higher than 50 GWh. The outcome of this review is the calculation basis for the system charges, which vary considerably on a regional level.

Capacity congestion
The separation of the German-Austrian electricity prize zone on 1 October 2018 also contributed to the increase of system charges, as higher costs were introduced to avoid capacity congestion. Since then, electricity trading between markets has continued on a large scale and is secured by long-term capacities and, depending on the grid situation, additional short-term capacities where needed. Due to the allocation of the costs to high-level networks and the different control areas, the increased system charges are relevant only in the East-Austrian control area.

Network loss charges
A significant increase of network loss charges caused by the general increase of costs to cover these losses are indeed a part of system charges, but only to a small extent.

Considering these reasons, the system charges in 2019 for the network area Linz (across almost all network levels) were raised by 14.3%. Nevertheless, the system charges in Linz are below the Austrian average. Moreover, the system charges in the network area Carinthia, especially in Klagenfurt, were increased by 10% in all network levels. As a result, Carinthia is the most expensive network area. Despite Linz and Klagenfurt facing an increase, system charges were reduced in Vorarlberg by 10% and in Lower Austria by 5%. Thus, on average, system charges for the lowest network level (ie, households) were reduced nationally by 1.3% with the amendment.

Gas

Grid usage fees account for one-quarter to one-third of a consumer's total gas bill. The system charges for gas were reduced in 2019 by 9.6% on average, based on the Gas System Charges Ordinance. The cause of the relief is attributed to:

  • higher volumes of gas delivered via the grid due to increased use of gas power plants; and
  • increased consumption of gas due to weather conditions.

In almost all federal provinces the system charges were reduced, except in Vorarlberg, where these charges were increased by 6.4% for an average household customer.

For the West-Austrian area, especially Vorarlberg, the increase of the system charges is attributable to the increase of costs from the German booking system and the therefore changed system in Vorarlberg and Tyrol. A further factor affecting the system charges is the costs calculation from the distribution system operators in relation to the electricity sector. This calculation will remain in place until 2022.

Comment

In conclusion, the System Charges Ordinance 2019 and the Gas System Charges Ordinance 2019 bring further relief to system charges. Although certain networks have been significantly affected, the Austrian system charges are generally very stable. Household customers, who usually use the lowest network level, benefit especially from the stable and reduced system charges.

For the electricity sector, only time will tell to what extent the separation of the German-Austrian electricity prize zone will affect system charges. For now, it is too early to make a final assessment.

Co-authored by Sebastian Strauss (Paralegal, Schoenherr Austria).

This article first appeared on International Law Office.

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Further reading:
Consultation on implementation of network code on harmonised transmission tariffs

Dagmar Hozová

Associate

T: +43 1 534 37 50794
d.hozova@schoenherr.eu

legal service:

regulatory

country:

austria