Austrian Power Prices to Rise if Separated From German Market

The head of Austria's energy regulator said he is concerned about likely price rises if the European energy watchdog ACER decides next month to separate Austrian and German power markets, which have been bundled together since 2002.

"We would appeal against this if they decide this plan," the head of Austria's E-Control, Wolfgang Urbantschitsch, told reporters on Tuesday, adding he expected prices to rise "noticeably" in Austria.

ACER is expected to decide in November whether to create a bottleneck between Austria and Germany, in order to restrict oversupply from northern German wind parks flooding other countries' grids, a development known as "loop flows", which Germany's neighbours have increasingly complained about.

Currently, grids in Germany do not allow such power to flow into southern Germany in sufficient quantities to reach industrial consumers there because network expansion plans are years behind implementation.

Instead, volumes produced at power stations are rerouted via Poland, the Czech Republic and Austria and back into Germany, while power cannot be stored locally in large quantities.

ACER's move would aim at stabilising grid security in those countries because they have had to install expensive phase shifters to stem the power influx.

But Austria's Chamber of Commerce has said it expected prices to rise by around 15 percent compared to current levels, should the joint power zone be split.

Urbantschitsch said the European Agency for the Cooperation of Energy Regulators (ACER) could make a decision as soon as Nov. 8, and the drafts under considering were not promising.

Talks on the idea of splitting the markets are ongoing as governments, traders, neighbouring countries and stakeholders in power transport and user industries differ on the pros and cons.

The German regulator, for example, has said he would be able to cut reserve power needs to 1,900 megawatts (MW) by 2018/19 from the 5,400 MW of reserve capacity commissioned this winter, but only provided Germany's and Austria's networks were separated to allow better handling of excess power spilling into Austria.

The European Commission wants more, not less, cross-border power co-operation and price convergence to unify markets, encourage wholesale trading and to give consumers more choice.

Reporting By Alexandra Schwarz-Goerlich, writing by Shadia Nasralla