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Electricity grossly overpriced, study finds

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Electricity grossly overpriced, study finds
Photo: DPA
09:35 CET+01:00
Electricity customers will be forced to pay up to €2 billion too much for their power next year, a study commissioned by the environmentalist Greens party has found.

The study, reported in the Tuesday editions of the dailies Leipziger Volkszeitung and Saarbrücker Zeitung, found that 570 electricity suppliers around the country are passing on higher costs to customers in form of prices rises next year. But they are not passing on lower costs in other areas, the study claims.

“A pretext is being used here in order to conceal unjust price rises,” Bärbel Höhn, the Greens' deputy parliamentary leader, told the papers.

From either January 1 or February 1, energy suppliers will raise prices by an average 7 percent – and in some cases by as much as 20 percent.

On the one hand, suppliers are justifying price rises on the fact that in 2011, an extra 1.5 cents per kilowatt hour tariff will apply to renewable energies. On the other, there was a “substantial potential for price drops that have so far not been passed on,” the study says.

For instance, procurement costs had fallen by 30 to 40 percent since autumn 2008 but this saving had not been passed on to customers.

“The suppliers are repeatedly raising the price in order to lift their profits,” said the Greens' energy expert, Ingrid Nestle.

According to the study, the price rises were “incomprehensible.”

Under Germany's feed-in tariffs system, which aims to make renewable energy 12.5 percent of the overall consumption in 2010 and 20 percent in 2020, renewables such as wind and solar attract surcharges to encourage development of technology.

The report was compiled by energy economist Gunnar Harms, who is also deputy chairman of the Federation of Energy Consumers. It also reaches the conclusion that 2010 will be a record profit year for Germany's four big electricity firms.

“The combined annual profit should be about €30 billion. Never before have they run such high profits,” Harms told the Saarbrücker Zeitung.

DPA/The Local/dw

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