Jan 3, 2018   SOURCE: BusinessWire

BEV Energie - Interview on German Electricity Pricing

BEV Bayerische Energieversorgungsgesellschaft mbH has been operating as an energy provider in Germany for some four years now – and very successfully too. That is reason enough for börsennews.de, a leading German portal for economic news, to have arranged an interview with the Managing Director of BEV Energie (BEV for short), Uwe Kollmar. Some of the focal points of the conversation include the electricity market in Germany, the energy revolution, as well as BEV’s experiences with consumers. We also could not neglect the topic of electric cars, as power suppliers stand to gain most from e-mobility.

börsenNEWS.de: How is Germany’s electricity market doing, and what can the consumer expect in the future?

Uwe Kollmar, Managing Director of BEV Bayerische Energieversorgungsgesellschaft mbH (BEV Energie for short): Implementing the energy revolution is still the determining factor for the energy market in Germany. The energy revolution is leading to a decrease in conventionally generated power in favor of electricity from renewable energies. (1) The German Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railways (Federal Network Agency) also refers to it in its 2016 Monitoring Report.

The report also makes clear how exceedingly vital competition among suppliers of electricity or gas in the nationwide distribution has now become. The 2016 Monitoring Report states that since 2010, there have been continuously more providers than suppliers registering with the authorities in accordance with section 5 of the German Energy Act (EnWG). By June 30, 2016, the Federal Network Agency had listed 794 companies as suppliers of electricity or gas, or of both energy sources. In 2010 there were only 232 providers. (2)

börsenNEWS.de: How important is Germany in European electricity trading?

Uwe Kollmar, BEV Energie: Here too I’d like to refer back to the Federal Network Agency’s 2016 Monitoring Report. In the report, the regulatory authority writes that for the year 2015 alone, new highs were reported in electricity exports from Germany to other European countries. This means that Germany, as a central hub of European electricity trading, has further developed as a major player in the main combined system.

börsenNEWS.de: How is BEV positioned with regard to the competition?

Uwe Kollmar, BEV: BEV is an energy provider which entered the market as a newcomer a few years ago during the time of the liberalization of the energy market. Our competitive advantages lie in our high process efficiency, which is supported by innovative IT systems. All of this has meant that we are now very competitive, and can offer the customer excellent electricity and gas tariffs.

börsenNEWS.de: Time and again, you can read critical consumer reviews about BEV in the Internet forums dedicated to energy suppliers. Why is that, even though the market is so heavily regulated and there is also an arbitration body in the form of an energy consumer service in place at the Federal Network Agency?

Uwe Kollmar, BEV: In 2016, the energy consumer service registered around 15,000 inquiries and complaints addressed to all electricity and gas suppliers in Germany. The annual report says, and I quote: “In terms of content, the requests relate to a wide variety of topics from the gas and electricity sector. From these, the following could be ascertained: Billing, such as incorrect invoice, counter readings not in order, payment on account, discount amount, invoice not received, change of suppliers and registering/canceling, contractual disputes (such as contract period), bonus, termination, credit balance.” (3)

The fact is: In the energy market too, only those who deliver a permanently good service and who take customer complaints from all sectors seriously, can survive. BEV’s service quality is constantly checked and optimized. Excellent customer service is at the heart of our corporate philosophy. For us, it is especially important that the customer’s experiences with BEV are positive and sustainable.

börsenNEWS.de: When it comes to complaints, what bothers customers most when describing their experiences with BEV?

Uwe Kollmar, BEV: Again and again, almost all providers, including BEV, hear the claim that no bonus was paid. In our experience, this is usually a misunderstanding about the amount or time of the payment. The truth is, however: That in any case, we of course pay all that is due. An exception is if the customer has not paid an outstanding invoice. The bonus is then offset. Customers also often think that the due date for the payment of the bonus begins from the time of the order. But in reality the due date refers to the beginning of the supply of power.

börsenNEWS.de: What is your forecast? Can we expect further increases in electricity prices?

Uwe Kollmar, BEV: Here too I’d like to quote from the Federal Network Agency’s 2016 Monitoring Report. It states: Electricity prices for household customers as at April 1, 2016 have increased slightly in comparison to the previous year. Compared to 2015 with its reporting date of April 1, 2016, the average price for household customers with an annual consumption of 2,500 to 5,000 kWh increased by two percent to 29.80 ct/kWh (VAT included). (2f)

In Germany, around 75 percent of the total price comprises taxes, fees, network charges and levies. According to Eurostat, in comparison to other European countries, German household customers continue to pay the second highest electricity prices. In Germany, the burden for taxes, fees and levies alone lies at more than 50 percent, while the European average is considerably lower at around 33 percent. (2f)

According to the Federal Network Agency, household customers with the basic service and with an annual consumption of 2,500 to 5,000 kWh had to fork out on network charges (3) alone an average of 6.71 ct/kWh. Commercial customers with an annual consumption of 50 MWh had to pay on average 5.85 ct/kWh. And industrial customers with an annual consumption of 24 GWh had to pay on average 2.06 ct/kWh without a discount, in accordance with section 19 para. 2 of the Electricity Network Fee Regulation Ordinance (StromNEV).

The German Energy and Water Association (BDEW) is also talking of an average electricity price increase, at least for household customers, and is expecting the 2015 to 2016 kilowatt-hour price to rise slightly to 28.80 ct/kWh.

Taking all these data as a basis, one must expect a further hike in electricity prices.

börsenNEWS.de: Today, no energy provider is able to get around price comparison portals such as Verivox, Check24 or billiger.de when it comes to price and product comparisons, including electricity or gas. What is your cooperation like with these important platforms?

Uwe Kollmar, BEV: The price and product comparison portals make an important contribution to the competition on and the liberalization of the electricity market. Comparison portals are the ultimate platform for all consumers when changing energy supplier. Accordingly, it is important for energy providers to present themselves on such portals with good products. Ultimately, all market participants benefit from good products – first and foremost the customers.

börsenNEWS.de: Certain portals, like ReclaBox, provide a forum for consumers who wish to express negative criticism of service providers in a variety of industries. BEV has also been mentioned here.

Uwe Kollmar, BEV: Consumer portals are undoubtedly very important on the web. They help companies to identify possible weak points in the service. However, such portals unfortunately do not always reflect the whole spectrum of opinions on companies. The reason: Of course it’s primarily the people who believe that something is wrong who write the most often. Positive reviews are not welcome. We find this very regrettable.

For example, when a customer – a father of five – complained that he wanted to write about his positive customer experiences with BEV on a consumer portal, but his comments weren’t published. That made the customer very upset.

Customer feedback is of course always essential companies. When it comes to questions and comments on such consumer portals, we always respond immediately and solve such cases together with the customer.

We also do this because we know that in all sectors, companies can survive only with satisfied customers. This also applies to BEV. Therefore it makes absolutely no economic sense to alienate customers through poor service. This guiding principle is, as I said, the norm throughout the economy. We at BEV regularly conduct customer satisfaction analyses and have obtained an above-average number of positive assessment rates.

börsenNEWS.de: When we look at the traditional energy exchange portals, it is striking to see that BEV gets a recommendation rate of 87% to 97% from customers. What are the main concerns of customers who publicly criticize BEV?

Uwe Kollmar, BEV: According to the analyses of an independent social media assessment tool, most of these customer complaints addressed to BEV are about late payments of bonuses or missing end-of-year statements.

Misunderstandings are often the cause of these customer complaints. For example, the payment of the bonus depends on the preparation of the end-of-year statement. This means that without an end-of-year statement, no bonus may be paid out, since the bonus is calculated on the basis of the statement. In order to prepare the end-of-year energy statement, BEV Energie requires, as all energy providers in Germany do, the relevant billing information. They are made available by network and measuring point operators within time frames over which we have no influence.

Unfortunately these operational procedures also take time, sometimes up to several weeks. Customers are often not aware of this. This can then lead to anger, misunderstandings and angry posts on forums. In addition to bonuses, package tariffs were a cause for discontent in the energy sector a few years ago. We no longer have these at BEV and they are in general hardly marketed any more.

börsenNEWS.de: There are customer complaints on the Internet, according to which the energy providers’ indicated kWh quantities allegedly do not match the actual amounts. For that reason, the price increase is allegedly not justified. What is your position on that?

Uwe Kollmar, BEV: There is such criticism out there. That is true. But in general, the terms are all jumbled. On the one hand, price increases are related to a change in tariff. However, this is often confused with the adjustment of the advance payment. Each case must therefore be tested individually. When ordering, the customer will generally provide his annual power consumption data. These values are, of course, ultimately the forecast values based on the previous historical consumption values. The specific consumption values are however only determined at the end of the billing period at the measuring points and network operator.

Unfortunately however, the consumption values specified by the customer at the time of the order often do not match those determined by the measuring points and network operators and then made available to us. If there are discrepancies here, we inform the customer of the situation by letter and tell them that there will be an adjustment of the advance payment for the differing consumption value. It is actually quite a normal process, but over and over again cause for irritation.

Of course our customers always have the option of providing us with information and documents with which they can prove the divergent power consumption from the measuring points and network operators. These can, for example, include the current annual consumption bill from the previous supplier or a photo of the electricity meter. On the customer’s behalf, we then consult with the relevant measuring points and network operators and try to obtain an adjustment of the quantity consumed. We manage to achieve this in most cases.

We ourselves as an energy supply company, which is also referred to in abbreviated form in German as EVU (3), do not have the option of reading the consumption values.

börsenNEWS.de: Consumer advice centers have always wanted to see the electricity market liberalized. Now it has happened, but there is still criticism here and there.

Uwe Kollmar, BEV: It is very important that the consumer centers and consumer advisors keep a strong focus on the energy market. We all want a functioning, and above all, affordable energy market. Transparency is crucial. Only through competition and competitors can the consumer play a part in the change in the energy market and in the energy revolution. I personally would like to see much more transparency in the energy market.

We have understood through the reactions and feedback from our customers that it is not yet sufficiently transparent as regards which costs are incurred where in the energy market, and which the customer must ultimately cover. For example, customers are still not aware of the challenges and costs involved due to the energy revolution. In this regard, consumer centers and consumer advisors can provide a lot of added value for customers and consumers by making it clear to them that: The prices for electricity are only minimally determined by electricity companies and are largely dictated by others. A lack of transparency is the basis for misinterpretation, which in turn leads to misinformation. This is not helpful at all and harms everyone.

börsenNEWS.de: Are intelligent meters, so-called smart meters, the solution for the lack of transparency on the electricity market you’ve described?

Uwe Kollmar, BEV: The trend towards smart meters is very positive. This increases transparency. The customer can at all times check his energy consumption. Digitization is an important driver for the industry in this respect. High costs for measuring consumption could technically be reduced, if we all pull together. Therefore it’s perfectly clear: Yes, smart meters play an important part in providing greater transparency in the interest of the consumer.

börsennews.de: How is BEV positioned for the future?

Uwe Kollmar, BEV: We see BEV Energie as well positioned and stable thanks to strategic partnerships. We are facing up to the competition, but must always work on ourselves. The most important thing is, and this is our company philosophy: We want satisfied customers who can count on us as a dependable partner. That’s why customer criticism, which helps us to become better, is extremely important. Furthermore, we love the whole energy market, which is continually developing and requires a great deal of flexibility from us all.

börsenNEWS.de: The last question concerns electric cars. Do you believe that the hype around electric cars and electric car quotas, in other words e-mobility, will cause an increase in electricity consumption in Germany?

Uwe Kollmar, BEV: With regard to environmental protection and the reduction of the enormous amount of road noise from loud internal combustion engines, electric cars are of course the better alternative. I do not believe that we ourselves will have a significant increase in electricity consumption if there are, say, a million electric cars on our streets. Consumers will also make an important contribution by a more conscious approach to energy use and through more efficient appliances.

The goal must always be the reduction of energy consumption, and of course not its increase. This is what we are unconditionally in favor of as an energy supply company. It is always our goal as an energy supplier to provide the customer with suitable services and products. But it is also important that the industry makes significant progress in saving power. This is the next very big step that we all need to take.

The German daily newspaper, DIE WELT, recently published an interesting article under the heading “Current price collapse caused by Cyclone Herwart reveals madness of the energy revolution”. The text illustrates that the German energy market and energy revolution are sometimes rather grotesque. For example, storms due to the numerous wind turbines often lead to an overproduction of electricity.

This suggests, according to DIE WELT, that the price of electricity will drop and continue to spiral down as a result. Only, the customer does not benefit from lower electricity bills, as this is not yet the situation in Germany. This problem can be solved in future for all of us by using power stores and excess capacity. The energy market therefore remains an exciting one.

Single references

(1) Erklärung zum Strompreis-Bestandteil "EEG-Umlage", by Wuppertaler Stadtwerke, on: YouTube, 18 December 2013. https://youtu.be/Jsryv7eTgK0

(2, 2f) Bundesnetzagentur, Bundeskartellamt, Monitoring-Bericht 2016, of 30 November 2016, page 379 and page 8.

(3) Bundesnetzagentur, Verbraucherschutz und -Service Energie, Jahresbericht 2016, page 31.

(4) Energieversorgungsunternehmen, EVU, on: Wikipedia.

The original source-language text of this announcement is the official, authoritative version. Translations are provided as an accommodation only, and should be cross-referenced with the source-language text, which is the only version of the text intended to have legal effect.