Swiss electricity supply

Gas and electricity prices are also skyrocketing in Switzerland. In the National Council and the Council of States, which began their autumn session on 12 September, corresponding proposals are ready: Financial aid for low-income households, a “rescue umbrella” for “system-critical electricity companies” (specifically for Switzerland’s largest electricity company Axpo, which is wholly owned by the cantons of north-eastern Switzerland and their power plants). In addition, the ESPEC Committee of the Council of States, which is responsible, is taking urgent measures “to increase winter electricity production from renewable energies as quickly as possible”, and a demand by the Swiss Federation of Commerce (sgv) goes in the same direction. For the sgv, the top priority at the moment is to protect SMEs from astronomical electricity prices, in other words, to save thousands of jobs and avert a wave of bankruptcies.

Federal Councillor Simonetta Sommaruga, head of the Department of the Environment, Transport, Energy and Communications DETEC, launched her energy-saving campaign under the motto “Don’t waste!” with the emotional but inaccurate words: “The war in Ukraine is causing energy to become scarce – in Switzerland, too. This affects us all, the population as well as our companies.”¹ Firstly, the feared gas shortage is not due to the war in Ukraine, but to the artificial shortage of fossil energies by the Anglo-American oil and gas multinationals and the Gulf states. The European governments, including the Swiss government, are adding to this with their uniquely harsh sanctions against Russia: they are knowingly and willingly accepting that the Russian oil and gas flow, which has been reliably flowing for decades, will come to a standstill or dry up completely. Secondly, the threat of a shortage of electricity in winter is homemade and has been known for years, this year intensified by the presumed loss of French nuclear power, which Switzerland uses to fill its electricity gaps in winter. France is likely to have difficulties in procuring enough uranium for its 56 NPPs because uranium supplies from Russia are officially frowned upon in the EU area (but are apparently still being procured to some extent from behind the scenes²). In addition, the French NPPs benefit from the high electricity prices to which they contribute with their shutdowns.
  Knowingly and willingly, our governments are allowing their people and businesses to run into an energy shortage. What would Obelix say? The Europeans are crazy!

Ground-mounted solar systems in Valais high valleys

The fact that Switzerland is making far too slow progress with the expansion of renewable energies has been known long before the Ukraine war. Now, however, things are moving. Peter Bodenmann (former President of the SP Switzerland), Pascal Couchepin (former Federal Councillor, FDP) and Oskar Freysinger (former National Councillor and former Cantonal Councillor for the Valais, SVP), all three citizens of the canton of Valais, have joined forces across party lines to support two solar projects in uninhabited, sunny high valleys on the territory of the municipalities of Gondo and Grengiols.
  The Committee for the Environment, Spatial Planning and Energy (ESPEC) of the Council of States has quickly picked up this thread. On 29 August, it decided to “create the legal basis for the accelerated expansion of photovoltaics [...]”. For “plants with a high proportion of winter electricity production, as is particularly conceivable in alpine terrain”, rapid and uncomplicated approval procedures are to be provided for with a planned annual production of over 20 GWh. In particular, “the interest in their realisation should take precedence over other interests of national and cantonal importance”. “The consent of the landowners and local communities is a prerequisite. The federal government also supports these facilities with an investment contribution.”³ In Gondo and Grengiols, the owners and the municipalities are of course in agreement, because they would get cheap electricity and contributions for the site municipalities. Other mountain communities would certainly follow suit, and if the federal contributions cover costs to some extent, the Swiss electricity companies will also be prepared to invest. On the other hand, Pro Natura and the Foundation for Landscape Protection have already come forward and are calling for greater consideration of environmental interests.⁴

Priority for renewable energies: a paradigm shift

On 9 September 2022, a clear majority of the ESPEC-S (9 to 2 votes with 2 abstentions) approved the Federal Council’s proposals for the revision of the Energy and Electricity Supply Act with reservations and inserted substantial amendments. While the Federal Councillor responsible, Simonetta Sommaruga, did not include the promised “streamlining of the licensing procedure” in the draft bill, the Council of States Committee considers it “necessary to act more quickly and go further” than the Federal Council in the expansion of renewable energies.⁵ In order to achieve higher target values for electricity generation from renewable energies more quickly, the Committee decided by 8 votes to 5 “that the fulfilment of these expansion targets should enjoy priority over environmental law and must not be hampered by its provisions”. On 15 September, the Council of States approved this proposal as an urgent federal law with 32 votes in favour, 9 against and 4 abstentions. In doing so, it heralded a paradigm shift. In a power shortage situation, the supply of energy to the population – under certain conditions – would have to be given higher priority by the administration and the courts than the protection of the landscape and the environment. Now it is the turn of the National Council.
  The proposals of the Swiss Confederation of Commerce (sgv) of 12 September go in the same direction: “The construction of small-scale plants of all sustainable technologies at the household level should be exempt from approval. Large-scale hydroelectric and wind power projects should be exempt from the objection procedure”. According to the sgv, the insecurity of the energy supply, combined with the “virtually exploding electricity prices”, “no longer permits any delay with regard to the economic survival of some SMEs”.⁶

Sensational “No” to the “Opening” of the Swiss electricity market

Another decision by the Environment, Spatial Planning and Energy Committee of the Council of States (ESPEC-S) is nothing short of sensational! In its media release of 9 September, the Committee “opposes the complete opening of the electricity market proposed by the Federal Council”. The reason given by the ESPEC: “In its work, the Commission has found out that full market liberalisation is not capable of gaining a majority and makes no sense in view of the current situation.”
  This means nothing less than a “No!” to the full privatisation of the public service in the electricity sector demanded by Brussels and sought by the Federal Council for more than 20 years. Or to put it another way: it means a No to an electricity agreement with the EU. An “institutional umbrella”, as Brussels wants to impose on Switzerland, floats off into the distance. A look back is necessary here.

20 years ago, the Swiss people stopped the rapid march towards Brussels

In 2000, the Federal Council and the parliamentary majority approved the Electricity Market Act (EMA), a pure liberalisation law in accordance with EU directives, without protection of supply security and without price regulation. At the time, the Swiss Trade Unions Federation (SGB) alone took the initiative for a referendum. On 22 September 2002, the electorate said no to the sell-off of Swiss power plants with 52.6 per cent of the vote. A few years later, the Federal Council and the parliamentary majority, who were already staring at the EU snake like chickens instead of adhering to the will of the people, drafted a law with partial market liberalisation, which has been in force since 2009. Nobody wanted to collect 50,000 signatures a second time – that’s how you strangle direct democracy! In a “first step” (also called “salami tactics”), large consumers (from 100,000 kWh per year) have been able to choose their own supplier since then (i. e. buy their electricity on the “free” market), while households and small businesses remained in the state-guaranteed basic supply. However, businesses also had the option of remaining in the basic supply, what many SMEs did. On the other hand, once a company had opted for the market, it could not return to the basic supply.
  For many years, the model of “partial market liberalisation” paid off for the SMEs that had chosen this path, while the companies and households in the basic supply could not choose their suppliers and thus also the electricity tariffs - which were based on the cost price. The Federal Council has been aiming for the second salami slice for some time: complete opening of the electricity market, i. e., free choice of electricity supplier also for households and small businesses. Federal Council quote: “The Federal Council expects the restructuring of the electricity market to strengthen decentralised electricity production and thus improve the integration of renewable energies into the electricity market.”⁷ It doesn’t get more absurd than this!

Swiss electricity supply as a traditional public service

The Swiss power plant companies, including the large ones such as Axpo and Alpic, but especially the numerous small ones, have always been almost exclusively owned by the public sector, i. e., primarily by the cantons and communes. Many communes operate their own hydroelectric power plant on their land and supply households in the locality with their electricity. If they do not have enough electricity for their consumers, they have to buy it on the market. The large corporation Axpo is also wholly owned by the public sector, but at the same time it is a multilateral company, which means that Axpo invests in wind power plants on the North Sea, for example, and does business in many countries. Some large corporations are partly listed on the stock exchange, but that is the exception.
  For the basic electricity supply, this diverse network means that the tariffs of the individual suppliers are not the same for all Swiss households. In the Electricity Supply Act, the Confederation lays down the obligation of the approximately 630 network operators to ensure supply, as well as precise regulations for calculating tariffs. The tariffs must be reported to the Federal Electricity Commission ElCom, which publishes them in advance. However, as ElCom writes: “Prices vary within Switzerland between network operators, in some cases considerably, which is mainly due to major differences in energy procurement (share of own production, procurement strategy).” In 2023, electricity prices in the basic supply for households will increase by 27 % on average. However, “the differences can be much higher at the local level”, according to ElCom⁸. It should be added that due to the strong increase in e-mobility and unchecked immigration, the regional power plant companies are being forced to purchase more and more additional electricity. Nevertheless, the Swiss electricity system, especially the hydropower companies, is still largely rooted in the ground. Their integration into the EU market, but also a standardisation of electricity tariffs by the federal government, would not fit in with the small-scale, federal system. Public service – with the exception of postage stamps – does not necessarily mean that it is the same price everywhere in the country.

Many SMEs want to go back to the basic supply

In today’s situation of electricity shortages and skyrocketing electricity costs, the basic supply model is proving to be clearly superior, many Swiss SMEs are reaching their limits and want to return to the basic supply. For example, Fabio Regazzi, president of the Swiss Federation of Commerce, Centre national councillor and roller shutter manufacturer from Gordola in the canton of Ticino. His company employs 140 people and has an annual turnover of around 25 million Swiss francs. His family business has been a customer of Società Elettrica Sopracenerina (SES) since it was founded a good 75 years ago. When the Swiss electricity market was opened up to medium-sized companies in 2009, Fabio Regazzi remained an SES customer, but chose the more attractive offer of the “free” market there. In 2022, his company will pay 60,000 Swiss francs for the electricity. Now his four-year contract is coming to an end, and the electricity provider is asking for a whopping one million for 2023! If he does not find a solution, Regazzi says, he will have to cut jobs.⁹ According to the daily press, about 22,000 Swiss companies are in a similarly difficult situation.
  That is why the Swiss Federation of Commerce sgv is proposing a regulation whereby companies can return to the basic supply from the so-called free electricity market at their own request. To prevent constant back and forth, depending on market prices, they would have to comply with certain conditions, for example a lead time of one year, and after switching to the basic supply they would have to remain there for at least 3 years.¹⁰
  It doesn’t scare off a goat: The public service and direct democracy are vastly superior to internationalisation and profit orientation. The Swiss electorate will still have a say in the design of the electricity supply!  •

¹ https://www.energieschweiz.ch/programme/nicht-verschwenden/spartipps-privathaushalte/
²  “Uran aus Russland: Kein Gas, dafür Uran. Frankreichs Atomindustrie ist auf russische Lieferungen angewiesen” (Uranium from Russia: No gas, but uranium. France’s nuclear industry relies on Russian supplies.). In: Zeit online of 13 September 2022
³  “Dringliche Massnahmen zur Erhöhung der Winterstromproduktion” (Urgent measures to increase winter electricity production). Media release of the ESPEC-S of 29 August 2022
⁴ Bühler, Stefan. “Solar-Revolution: Bergler im Goldrausch” (Solar revolution: mountain people in a gold rush). In: Walliser Bote of 30 August 2022
⁵ “Stärkung der Versorgungssicherheit mit ambitionierten Zielen für einen schnellen Ausbau der erneuerbaren Energien” (Strengthening security of supply with ambitious targets for rapid expansion of renewables). Media release of the ESPEC-S of 9 September 2022
⁶  Swiss Federation of Commerce sgv. “Massnahmen zur Bewältigung der Stromkrise – es muss rasch gehandelt werden”. (Measures to tackle the electricity crisis – action must be taken quickly). Media release of 12 September 2022
7  https://www.uvek.admin.ch/uvek/de/home/energie/oeffnung-strommarkt.html
⁸  “Sharply rising electricity prices in 2023”. Media release from the Federal Electricity Commission of 6 September 2022.
⁹  Müller, Myrtle. “1600 percent more for electricity!” In: Blick of 10 September 2022
¹⁰  Swiss Federation of Commerce sgv. „Massnahmen zur Bewältigung der Stromkrise – es muss rasch gehandelt werden“ (Measures to tackle the electricity crisis – action must be taken quickly). Media release of 12 September 2022