Stadtwerke Gießen AG (SWG) comments as follows on the questions published by the Gießen Tenants' Association:Question 1: How do you explain to customers that, according to an EU study, gas prices in Germany are 15% higher than the European average? Why do countries such as Great Britain with a liberalised gas market have significantly lower prices? Contrary to the EU study cited by the tenants' association, a recent study by Energy Advice, London, comes to a different conclusion. According to this study, natural gas prices for households in Germany are only in the European midfield and not, as stated, 15% higher than the European average. One reason for the different price levels: The level of taxes and levies varies between European countries. In Germany, according to the Federal Association of the German Gas and Water Industry (BGW), the state currently levies 30 per cent of household gas prices; incidentally, according to Energy Advice, natural gas prices have risen considerably in the last 12 months in all the countries surveyed - including the UK, where some contracts do not include an oil price link. This shows that no country can decouple itself from the global energy price trend. A second reason is that the requirements for technical safety and security of supply are very high in Germany in order to protect customers. In some European countries, these requirements are significantly lower. Considerable effort is required to maintain these safety standards, which is of course also reflected in the prices: natural gas is cheaper to buy in the UK than here. In addition to the reasons already mentioned, this is due to the fact that the UK has extensive domestic production facilities. The situation in Germany is different: only around 19 % of our gas requirements are met from domestic sources. Most of it has to be imported. For Germany, this means high transport costs for gas from Siberia, Norway, the Netherlands and the UK. However, British natural gas reserves are dwindling rapidly. It remains to be seen what effect this will have on prices there. Question 2: Why does one of your upstream suppliers, E.ON - the largest in the cartel of gas importers in Germany - make a corporate profit of 3 billion euros? the tenants' association would have to contact E.ON Ruhrgas directly for a more detailed explanation of the corporate profits. In general, SWG cannot be compared with a company like E.ON Ruhrgas AG, as has been the case with the sometimes unobjective criticism in the public and media. Within the gas industry, there are companies operating independently at different supply levels. E.ON Ruhrgas is one of the production and import companies that extract natural gas from storage facilities in Germany or procure natural gas from foreign suppliers and sell this natural gas to national, regional and local gas supply companies and industrial companies. SWG is a regional gas supply company and, as a final distributor, supplies private households, commercial and industrial companies; as a final distributor, we are currently in the difficult position of having to pass on an increased gas price to our customers, which has not arisen at our market level, but is charged to us by our upstream supplier in the form of an increased purchase price. The background to this increased purchase price is the rising oil price on the world market, which has a direct effect on our purchase price via the oil price link in the long-term supply contracts with E.ON Ruhrgas AG. We are also amazed at the level of profits reported at the E.ON Ruhrgas AG market level. These sums show where the big money is made in the gas industry. Politicians have contributed to the creation of E.ON Ruhrgas, the largest company in the oligopoly of gas importers. The merger of the two companies was prohibited by the Cartel Office at the time. The then Economics Minister Müller and State Secretary Tacke then pushed through the merger by ministerial authorisation. As end distributors, we also have to live with the consequences of this decision today. Question 3: Why doesn't Stadtwerke Gießen follow the example of some local gas suppliers in NRW who disclose their price calculations and thus provide proof that they only pass on the increases of their upstream suppliers? Stadtwerke Lünen will be the first company to participate in the procedure in NRW mentioned by the tenants' association. In this procedure, however, disclosure of the calculation only means that the gas supply company has its upward or downward price changes checked by independent auditors. A comparison of our prices with those of Stadtwerke Lünen shows that we are significantly cheaper. A customer with an annual consumption of 30,000 kilowatt hours (kWh) pays EUR 1,653.60 per year for their gas consumption at Stadtwerke Lünen. At SWG, the same customer pays only EUR 1,545 per year, and our prices, like those of all other gas suppliers in Hesse, are scrutinised by the State Cartel Office. SWG is not one of the companies that have been asked by the state cartel office to reduce prices. This is further proof that we offer comparatively favourable prices. The pricing of Mainova in Frankfurt has attracted particular attention in the press and the public. The current price increase there took place under the eyes and with the approval of the Hessian Minister of Economics, Dr Alois Riehl, who was given access to Mainova's calculation and the increase in procurement costs as part of the antitrust proceedings. At 0.68 Ct/kWh gross, Mainova's increase is higher than SWG's increase. We have only increased by 0.5 Ct/kWh gross. SWG's prices are also much more favourable in absolute terms. While a household with an annual consumption of 30,000 kWh pays EUR 1,705.30 per year at Mainova, it is only EUR 1,545 per year at SWG. This comparison also speaks for itself. The examples given are sufficient proof that our prices and the price increase on 1 October 2005 are justified. We therefore see no reason to spend the extra money for an audit by an auditor. Question 4: Is the assumption correct that Stadtwerke Gießen sells gas to its major customers at dumping prices (i.e. at prices below its own costs) in order not to lose these customers? (You have to know: Large customers are allowed to choose the cheapest supplier, small customers unfortunately not)This assumption is definitely not correct. We have also had to increase the prices for our major customers due to the development of oil prices. This is reflected in the contracts with these customers via a so-called price escalation clause. What sense would it make for a commercial enterprise - and that's what we are - to want to keep customers whose supply is subject to additional charges? the claim made by the tenants' association that large gas customers can choose the cheapest gas supplier, while small customers do not have this choice, also completely ignores reality. In the past, there have only been isolated cases in which a major customer has switched to another supplier. However, this was only possible in the special case where the other supplier with its pipeline network was in the immediate vicinity of this customer. This option does not currently exist for the vast majority of customers. In practice, the transmission of gas is not yet sufficiently regulated, partly because, unlike electricity, gas is actually transported and gas has different qualities. We recently had to experience this "first-hand" when we were looking for more favourable purchasing options for our natural gas in the interests of our customers. To our regret, we were unable to find such an option, as no practicable solution could be found as to how another supplier could have supplied us with gas.
10.10.2005