BKW FMB Energy Ltd Annual Report 2003

Market
Switzerland’s electricity market – an important European hub
The winds of change blowing through the European electricity
market are also affecting Switzerland’s energy industry.
Legal and institutional reforms are required to keep pace with
European developments and maintain the country’s position
in the international market.
Switzerland’s key market position
The changes which have been sweeping
the European electricity market over the
past few years continued to have an impact
in the year under review. In 1997 the EU
laid down principles governing the EU
electricity market, prompting a move to
renew existing regional and national supply
structures; and in early June 2003 the
European Parliament approved guidelines
for liberalisation of the electricity and gas
markets as well as for cross-border trading
in electricity. Full deregulation of
these markets will become a reality at
the beginning of July 2007. In Switzerland
the legal reform process has been
brought to a halt. For the time being, the
Swiss electricity industry can profi t from
liberalised European markets and, in addition,
derive benefi ts from its closed home
market. Given Switzerland’s function as
an electricity hub in the centre of Europe,
and in view of the volume of energy exports
during the summer months as well
as the country’s dependence on imports
of European energy during the winter
months, it is essential for Switzerland to
keep pace with Europe so as to maintain
the position that Swiss electricity com-
panies have won for themselves on the
international market, and to ensure their
unrestricted access to European markets.
The collapse of the electricity supply in
Italy at the end of 2003 highlighted the
complexity of Switzerland’ s electricity
market as well as its close relationship
with energy markets abroad.
Stable conditions on the
Swiss market
In 2003 the Swiss market structure,
which comprises 900 electricity supply
companies and six large regional plants,
remained largely unchanged. The same is
true of the ownership structure. The public
sector (government, cantons and communities)
continues to hold three quarters of
the basic capital of Swiss electricity companies,
while private individuals hold 15
percent and foreign investors 10 percent.
Total expenditure by end consumers remained
constant at slightly above CHF
8 billion.
Swiss electricity companies
ready for the market
While delayed liberalisation of the electricity
market in Switzerland has held
back the structural reorganisation process,
many electricity companies have
entered into cooperations with a view to
market deregulation. A dominant trend
in 2003 was the launch by a number
of energy companies of attractive new
products and services tailored to customers’
needs. Pricing policies were also
adjusted. On 1 October 2003, BKW and
its Youtility partners launched the “1 to
1 energy modulo” product that offers
special price benefi ts for SME customers.
Many large and small electricity operators
also offered price concessions to
individual customers. Only in the case of
large consumers did prices for individual
agreements show a general upward trend,
with the aim of partially reversing the
preferential conditions negotiated ahead
of the referendum on the electricity market
law. From BKW’s standpoint, these
developments clearly indicate the Swiss
electricity industry’s readiness to tackle
the challenges of a liberalised market and
to promote the rapid introduction of a new
11