Municipal utilities remain essential for energy provision

Competition only works if municipal utilities are independent

Kassel. In the opinion of Dr. Gerhard König, managing director of Kassel-based energy provider WINGAS GmbH, the latest draft laws of the European Union on regulated grid access and on unbundling will not restrict the position of municipal utilities. “The municipal service provider companies are and will remain an important link in the energy supply chain,” König recently told the monthly publication for municipal politics DEMO. End consumers, he said, trusted the energy provider, which they had known for decades and which as contact partner was located right on the spot. The fact that very few end customers change to nationally or internationally active companies alone showed, König declared, “the appreciation of the exemplary all-round service” provided by municipal companies.

In an interview with the specialist mouthpiece of the Sozialdemokratische Gemeinschaft für Kommunalpolitik (association of local SPD politicians), Dr. König stated strong and independent municipal utilities as being the most important pre-condition of functioning competition - which is after all the aim of liberalisation. “Only if there is a large number of market participants will there be real competition,” said the WINGAS managing director. But, he said, the strong position of the municipal utilities depends above all on the independence of the companies. “Only independent municipal utilities stand a good chance of maintaining, let alone expanding, their position on the liberalised market,” stressed König, “because it is precisely for municipal provision companies that it is becoming increasingly important that they are able to react flexibly to changing conditions – but in order to do this they must have freedom in business decision making.” König doubted whether this freedom would be assured in the case of strategic investment by a foreign or regional energy provider in a municipal utility.

“Of course,” said the managing director, “a sale of parts of a company may in certain cases be justified on business management grounds,” but this, he said, mostly brought only temporary relief for the municipalities – also not to be forgotten, was the gradual loss of internal expertise in many core areas and the relinquishment of business decision-making powers to third parties. “Within the present legal framework, every municipal utility in Germany had,” emphasised Dr. Gerhard König, “the opportunity of expanding their supply portfolio to at least two suppliers and of thus significantly improving their position in future negotiations.” Consequently, he said, municipal utilities could negotiate better contractual terms and make accordingly a measurable contribution to safeguarding their municipal locality. For of this Dr. König is sure: “The theme ‘energy’ will become an increasingly important location factor for municipalities when they compete to attract lucrative industry to base operations in their vicinity.”

For further information go to: www.demo-online.de

Dr. Gerhard König is a member of the managing board of WINGAS GmbH and managing director sales and marketing Germany. WINGAS GmbH is a joint venture by Wintershall AG (65 %) and the Russian company OAO Gazprom (35 %). Both partners have been active in gas supply since 1990 and supply natural gas via their pipeline system, now over 2.000 kilometres in length, to public utilities, major industrial companies and regional gas supply companies in Germany and Europe. Wintershall and Gazprom have to date invested more than 2,7 billion euros in the set-up of the WINGAS natural gas pipeline system. The pipeline system connects the large gas reserves of Siberia with the growing sales markets of western Europe and additionally enables WINGAS access to the further developing European spot markets. With the natural gas storage plant Rehden, which has a working gas volume of over four billion cubic metres, WINGAS has at its disposal over a fifth of the entire storage capacity available in Germany. The natural gas storage plant Rehden is the largest natural gas storage plant in western Europe.

WINGAS. More energy - together.

PI-04-10 - 09/27/04

Contact
Stefan Leunig
fon: +49 561 301-3301
fax: +49 561 301-1321
press@wingas.de

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Complete interview
The complete interview with WINGAS managing director Dr. Gerhard König
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