In the wholesale natural gas market, individual companies – particularly those from gas-exporting countries – continue to wield considerable market power, even though significant counter-trends are already evident here as a result of the expansion of the pipeline network, the development of liquefied natural gas (LNG) trade and the growth of European spot markets. Regulation of the gas networks has also made significant progress recently; however, many European gas markets remain fundamentally insufficiently liquid and regulatory structures need further development. The level of European integration achieved in the electricity sector has not yet been reached in the gas sector. Key next steps lie in better integrating European gas markets into a single trading area.
In the electricity generation markets, a recent decline in the still high level of concentration has been observed. A brief analysis of the implications of a faster phase-out of nuclear power has shown that this decline will continue. By contrast, little progress has been made to date in ensuring effective competition in these markets and in downstream electricity trading markets. In particular, as part of various initiatives by the European Commission and the proposed establishment of a German market transparency body, the conditions for the effective functioning of these markets and their regulatory oversight should be improved, for example through the application of behaviour-based models.
Furthermore, a multitude of market distortions result from the regulatory framework for renewable energy. The expected increase in the share of renewable energy in electricity generation suggests that market distortions in this area will continue to grow and will also have an adverse effect on consumers. The Monopolies Commission therefore considers a fundamental shift towards a more market-oriented system to be long overdue and regrets that the opportunity to align the Renewable Energy Sources Act more closely with market principles was missed in the current amendment. The Monopolies Commission proposes a shift to a quota system under which electricity suppliers would be obliged to maintain a certain proportion of renewable energy in their own procurement portfolio.
In its assessment of competition supervision by the European Commission and the Federal Cartel Office, the Monopolies Commission criticises in particular the application of price abuse controls under Section 29 GWB in the heating electricity sector, which is counterproductive to the development of competition and questionable from a competition economics perspective, and the termination of proceedings through commitment decisions. It rejects the proposed extension of the validity of Section 29 GWB.
The Monopolies Commission has examined numerous other issues and calls, for example, for a fundamental adjustment of the regulatory framework for traction power networks to improve competitive conditions in this sector. Furthermore, it notes that the participation of local authorities and other regional bodies in energy supply companies – often referred to as remunicipalisation – cannot be justified on efficiency grounds. With regard to transmission bottlenecks in domestic electricity grids, grid expansion is usually the subject of discussion. The Monopolies Commission draws attention to alternative solutions and also puts forward the creation of at least two price zones and the application of an efficient congestion management procedure for discussion.
