About one third of all households in Austria are supplied with local or district heating, with further expansion of these heat networks planned for the future. The role played by district heating is growing increasingly important, not least as part of the energy transition. District heating networks are provided regionally or locally only, and customers connected to these networks usually only have limited alternatives, if any. District heating suppliers therefore occupy a special market position in these regions.
Such considerations led lawmakers to adopt the Federal Act to mitigate the consequences of the crisis and improve market conditions in the case of dominant energy suppliers in June 2024, which also applies to the district heating sector and gives the AFCA the power to initiate proceedings before the Cartel Court under certain conditions. A sector inquiry can also regularly result in specific proceedings being initiated.
The AFCA inquiry will primarily look into those district heating markets and network regions in which the large provincial utilities such as Wien Energie, Energie Steiermark, KELAG, Salzburg AG, Energie AG, EVN etc. operate. To this end, the inquiry will not only be limited to structural factors (supplier concentration, entry barriers, cost structure etc.) but also include a detailed analysis of the market in relation to sales prices, revenues and procurement costs. Terms and conditions as well as business practices will also be examined, as these can be potentially detrimental to consumers.
“We regularly receive complaints from consumers about the district heating market. More than one million Austrian households are supplied with district heating. The provision of district heating is a growing market. And because of the special market structure, it is of utmost priority that we look into the competition situation and any possible abuse,” explains Natalie Harsdorf, Director General of the AFCA.
Approach used in the sector inquiry
The sector inquiry will be based on company data records, academic studies, relevant publications and in-depth discussions with stakeholders such as interest groups, institutions and (national and international) authorities.
More competition means better supply and better quality
Studies have shown that a higher degree of competition can improve supply and result in a higher quality of products and services, which ultimately benefits consumers.
In the course of its sector inquiries, the AFCA can analyse the competitive conditions from both a legal and an economic viewpoint to gain insights into the specific industry and its market conditions. The sector inquiry will allow the AFCA to identify possible competition issues and abuse in the district heating sector and pinpoint practices that might have a negative impact on consumers. The findings will be used to make recommendations. They may also give rise to proceedings before the Cartel Court. The results of the sector inquiry will be published in a final report.