Stadtwerke Dreieich recently raised the electricity price – to 37.50 cents per kilowatt hour. The federal government’s electricity price brake is therefore ineffective here. Managing director Steffen Arta warns of undesirable developments on the market and in politics. He also let Scholz and Habeck know that.
In the town of Dreieich, south of Frankfurt am Main, with a population of 45,000, the world is still fine – at least the world of electricity. While elsewhere the prices for the kilowatt hour (kWh) rise sharply at the turn of the year, they remain below the magical 40 cent mark for customers of Stadtwerke Dreieich. From this point onwards, the electricity price brake for 80 percent of the previous year’s consumption should take effect in January.
Nevertheless, Steffen Arta does not want to charge more for his electricity. As Stadtwerke boss, he does this out of social responsibility, which he does not see everywhere. The question of whether the electricity price brake could lead to deadweight effects is in the air.
In a letter to Chancellor Olaf Scholz, Federal Minister of Economics Robert Habeck, other politicians and industry representatives, he expressly welcomes the cap on energy prices. But the letter, which is available to FOCUS online, also says: “I am seriously concerned about the planned design of the energy price brakes in connection with the pricing policy of individual utilities, which cannot be politically desired in the form discussed.”
In an interview, Steffen Arta explains the background.
FOCUS online: In Dreieich there is no need for an electricity price brake. Why not?
Steffen Arta: We deliver our electricity for 37.50 cents per kilowatt hour (kWh), i.e. below the politically desired electricity price brake, which should take effect from 40 ct/kWh. This price is the result of our conservative procurement strategy. In 2020, we started buying forward energy quantities. That means fixed quantities at fixed prices for the delivery period of 2023. This is actually a normal procedure for our industry.
How do you manage where larger suppliers and municipal utilities fail?
Arta: As Stadtwerke Dreieich, we see it as our task to calculate the prices for our customers as seriously as possible, despite all the volatility on the energy markets. Of course, one could also go the opposite way of short-term procurement, as the so-called discounters have practiced in the past. We all know the result.
Arta: You separated from your customers.
When it comes to prices, are the new customers just running into you?
Arta: We only operate within our urban area. That was a strategic decision. But we have actually noticed for a long time that former customers of discounters or third-party suppliers are coming back. This trend is likely to intensify.
You wrote a letter to Scholz, Habeck and others. In it you yourself raise the question of whether Stadtwerke Dreieich is making a business error if they leave the basic service price at 37.50 ct/kWh. What would your answer be?
Arta: It’s actually questionable from a business point of view. We can see that other providers are increasing their prices. But the question is: What is our mission and how do we want to deal with it? I can state unequivocally for Stadtwerke Dreieich that we are aware of our responsibility to society as a whole. We know about the inflation rate in Germany and the share of energy costs in it. Our deepest understanding is that we cannot increase electricity prices more than necessary. Even if not much would change for consumers anyway because of the cap at 40 ct/kWh.
According to your own calculations, however, you could increase your operating profit by ten million euros if you were to raise electricity prices by 20 ct/kWh. Almost financed by the state. That actually sounds tempting.
Arta: Of course that sounds tempting. But for us, it’s not just about maximizing profits. That doesn’t suit us as a municipal utility either.
At least you don’t have to deal with the bureaucratic pitfalls of the electricity price brake.
Arta: We’re spared that for now.
Do you see certain free-rider effects from the electricity price brake in the industry?
Arta: One could have this assumption.
If you know which devices at home use how much electricity, you can make targeted savings. Our e-paper shows which devices consume how much electricity for all common household appliances, from ovens and stoves to refrigerators and washing machines to TVs and WLAN routers. There are also a number of instant power-saving tips.
When will you start thinking about higher prices too?
Arta: Our wish is not to have to make any price increases throughout 2023. But that also depends on how many new customers we will have, whether we have to buy additional energy and whether there are bad debts.
Has the chancellor or his economics minister already answered you?
Arta: Unfortunately not.
Are you still counting on it?
Arta: In any case, I would be very happy.