After more than two decades, Stadtwerke Gießen is raising the transfer prices for its district heating customers as of 1 January 2020. Labour and output prices will remain at their favourable levels. The price escalation clauses will also change.
From the middle of this week, all around 12,000 district heating customers will receive a contract cancellation from Stadtwerke Gießen (SWG). This measure, which some customers may find difficult to understand at first glance, has a relatively simple background: SWG has to adapt the contracts for the supply of district heating to new circumstances. "We would also prefer to proceed differently. But for formal legal reasons, we can't avoid cancelling the contract," explains Ina Weller, company spokesperson for SWG. She adds: "The cancellation will in no way lead to an interruption in the district heating supply."
The cancellation letters are accompanied by pre-filled new contracts. "We hope that we can continue to convince all our customers of our really fair offer," Ina Weller continues.
Changes to the contractual relationship
Why are there such changes to the contractual relationship? The main reason for this is the adjustment of the transfer price, which has been pending for some time. From 1 January 2020, this will amount to 125.82 euros gross per year instead of the previous 81.00 euros gross per year - an increase of 44.82 euros gross per year or around 3.74 euros gross per month. "In terms of the total amount, this only means an increase of between two and six per cent for the vast majority of our customers. In addition, we have kept our transfer price constant for more than 20 years. Now we simply had to take action," Ina Weller explains. Important to know: Despite the adjustment of this price component, district heating from SWG is still well below the national average in terms of cost. This is also because SWG was able to keep both the working price and the performance price at the same level as on 1 October 2019 as of 1 January 2020.
New price escalation clauses
The second important reason for the contract amendment: SWG is also adjusting the price escalation clauses and the formulas they contain for calculating prices. These contractual clauses ensure that district heating suppliers can pass on rising costs - especially for the primary energy used - to their customers. At the same time, they ensure that falling costs automatically lead to price reductions for customers. The legislator sets strict limits on the design of these clauses. Paragraph 24 of the "Ordinance on General Terms and Conditions for the Supply of District Heating", AVBFernwärmeV for short, clearly states that the development of costs for generation and supply as well as the conditions on the heating market must be taken into account appropriately when setting prices.
To ensure this and the necessary transparency, publicly accessible indices from the Federal Statistical Office are used in the clauses to calculate the prices. SWG therefore uses official values for natural gas and heating prices for the labour price.
Because not only the production of district heating costs money - it is paid for via the labour price - but also its distribution, there is a performance price. SWG uses this to pass on material and labour costs for the construction and operation of the plants and the network to the district heating customers. For the exact calculation, SWG uses the capital goods index of the Federal Statistical Office and the wage development of the collective labour agreement for utilities. Last but not least, the new contracts also contain a price escalation clause for the transfer price. This also relates to material and personnel costs. Consequently, SWG proceeds in the same way as with the service prices.
Third innovation
In addition to the new transfer price and the adjusted price escalation clauses, SWG has made a further change to the district heating supply contracts: Price changes are now only possible on 1 April and 1 October. The third option previously available on 1 January is no longer available.
"We apologise to all district heating customers for the effort involved in sending out the notices of termination and concluding the new contracts. However, this was the only way to implement the key changes to the contracts in a legally secure manner for both partners," summarises Ina Weller. Like their predecessors, the new contracts are characterised by transparency and fairness. And the many advantages that district heating offers remain unchanged anyway: with its primary energy factor of 0.27, Giessen district heating cannot be beaten by any conventional heating system from an ecological point of view. And anyone who honestly adds up all the costs incurred and also takes the comfort factor into account usually comes to the conclusion that district heating from SWG is also economically convincing.
Questions about district heating and the tariffs can be answered by SWG advisors from Monday to Friday between 7 a.m. and 7 p.m. on the service number 0800 2302 100 (free of charge from German networks). All information can also be found on the Internet at: www.swg-energie.de/privatkunden/waerme