Looking back
The Austrian Federal Competition Authority (AFCA) and Energie-Control (E-Control) set up a joint task force in spring 2023 to investigate the energy sector after energy prices skyrocketed. Exorbitant energy prices combined with high inflation and Russia’s war of aggression against Ukraine have made it increasingly difficult for many Austrian citizens to afford everyday essentials.
The AFCA and E-Control received a large number of complaints, most of which concerned soaring electricity and gas prices. The Task Force has set itself the goal of creating the necessary transparency on the energy markets for consumers, which it aims to achieve by monitoring these markets very closely (see the joint AFCA and E-Control press release of 18 January 2023). A liberalised energy market with well-functioning, effective competition is vital to ensure that consumers have access to choice and affordable prices.
The joint E-Control/AFCA Task Force has been focusing on the following energy market topics and market participant behaviour from a regulation and competition perspective:
- Plausible explanations of changes in electricity and gas prices and monitoring of the dynamics between wholesale and retail prices
- Differences in the contracts offered by suppliers to different customer groups (e.g. comparing contracts for existing and new customers)
- Supply strategies (specifically concentration on traditional supply zones)
- Impact of the energy price cap
- Market structure and positions (end consumer energy supply)
- Investigation of any signs of potential cartels or market abuse.
At the end of the first half of 2023, the Task Force published its first interim report. This provided valuable findings on changes in market concentration in the network areas, as well as on switching and offer behaviour in the consumer markets for electricity and gas.
The results of the interim report were based on extensive and intensive investigations, with several requests for information being made to the distribution companies of provincial energy suppliers, bigger public utilities and Verbund AG. Please see the joint AFCA and E-Control press release of 27 June 2023 for more information on the results.
Extension of Task Force and new focus on gas market
One of the main aims of the Task Force is to look into the impact of the energy price cap on price developments. The energy price cap was introduced by the Federal Government to ease the financial burden on Austrian consumers: it imposes an upper limit on energy suppliers’ prices per kilowatt hour (for more information in German see the website of the Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology - BMK). The energy price cap entered into force on 1 December 2023, and was originally meant to run until March 2024. Following its first extension until June 2024, it has now been extended once more until the end of 2024.
With the energy price cap, the additional support with electricity bills and the network support all being continued, the Task Force decided to also extend its own duration until the end of 2024.
Since the publication of the Task Force’s first interim report in June 2023, gas prices for existing customers have remained consistently high even though wholesale prices on the gas market have been falling. This was unexpected, as gas prices would generally be expected to fall more quickly than electricity prices, not least because gas providers have in the past cited their short-term procurement strategies compared with electricity suppliers as a reason for price adjustments. Gas prices in Austria are also falling more slowly than in Europe generally: Austria finds itself towards the top end of the average range.
In contrast to the electricity market and its energy price cap for instance, the gas market has not been supported by any kind of government subsidy. High gas prices have therefore placed a much more significant burden on household budgets. And this development in gas prices has of course also had an impact on inflation. All of this implies that there are barriers to effective competition in the retail gas market.
For these reasons, the Task Force decided to focus specifically on gas prices for retail and business customers.
The AFCA and E-Control will publish a final report to coincide with the end of the energy price cap’s extension.
“Electricity and gas are essential to all Austrian households and businesses. Gas prices have become alarmingly high, even though wholesale prices have fallen, so we will be investigating this situation from a competition perspective,” explained Director General for Competition Natalie Harsdorf-Borsch.
Wolfgang Urbantschitsch, Executive Director of E-Control, added: “We continued to see falling wholesale prices in the first few months of this year. We are therefore expecting suppliers to ensure that consumers also feel the benefit in their pockets soon. We see considerable scope for more price cuts for existing customers in particular.”
For further enquiries:
Austrian Federal Competition Authority
Abanoub Tadros
Phone: +43-1-24 5 08-815 388
E-mail: wettbewerb[at]bwb.gv.at
Web: www.bwb.gv.at
LinkedIn: www.linkedin.com/company/bundeswettbewerbsbehörde
E-Control
Phone: +43-1-24 7 24-0
Web: www.e-control.at
X (formerly Twitter): www.twitter.com/energiecontrol
Facebook: www.facebook.com/energie.control