The Energy Regulation and Markets Review - Stikeman Elliott

Germany
With the integration of the former market areas Thyssengas H-Gas, Thyssengas L-Gas
and OGE L-Gas into Netconnect Germany, the first quality overlapping market area
was created. Hence, both gas of low calorific value (LCV) and gas of high calorific value
(HCV) can now be transported within one and the same market area.
The merging of market areas has also encouraged further liberalisation of the
gas retail markets. In recent cases, the BKartA indicated that, in consideration of such
newer developments, the geographical market for the supply of small end customers
is no longer limited to the network area of local or regional public utilities, but may
rather encompass the territory of the market area or potentially Germany. As regards
the electricity retail markets, the competition authorities had already found the retail
markets to be countrywide in scope as a consequence of introducing the regulated thirdparty
access in 2005.
ii Energy market rules and regulation
In Germany the markets for the sale of energy are not subject to specific (price) regulation.
Nevertheless, competition law applies to retail activities. In this respect, Section 29 of
the GWB is of particular relevance. A dominant supplier of electricity or pipeline gas
(normally a public utility) is, in principle, prohibited from abusing such position by
demanding fees or other business terms that are less favourable than those of other
utilities in comparable markets. While Section 29 of the GWB was originally intended
to expire by the end of 2012, the recent draft amendment of the GWB contains an
extension until 31 December 2017.
In respect of energy trading, the EEX is an exchange subject to the regulatory
framework of the Exchange Law Act, the legal supervision of the EEX and the oversight
of the exchange participants are carried out by the Saxon State Ministry of Economy,
Labour and Transport. Trading on the EEX is anonymous in order to ensure equal
treatment of all trading partners. The EEX is monitored through an independent
and autonomous market surveillance body. However, there is no monitoring by the
German Financial Services Regulator, BaFin. Further safeguard measures for ensuring
fair trading and the prevention of abuse follow from the EU regulation 1227/2011 on
wholesale energy market integrity and transparency (REMIT) of 2011. The regulation
prohibits market manipulation and insider trading and requires the disclosure of insider
information.
In this context, the BMWi presented draft legislation in May 2012 to establish
a market transparency department at the BKartA. This department shall, inter alia,
safeguard the transparency of the energy wholesale markets and perform regular market
investigations. However, the draft legislation has been discussed, and is controversial
because of the purely national perspective the new department is expected to assume
despite the international nature of the energy markets.
iii Contracts for sale of energy
The legal framework in Germany does not limit energy trading to exchange trading but
is also open to over-the-counter (‘OTC’) trade as well as bilateral agreements. In relation
to electricity, one third is covered by OTC trading. Concerning the trade of natural gas,
OTC is still the predominant form of trading.
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