by Dr iur. Marianne Wüthrich
The excellent analysis by SVIL (Schweizerische Vereinigung Industrie und Landwirtschaft – Swiss Association for Industry and Agriculture) Executive Director Hans Bieri on food security in Switzerland (see article in this edition) led me to consider his thoughts on the question of energy security, which, incidentally, the author also includes. After all, nothing works without sufficient energy, not even agricultural production. My article was also prompted by the presentation given by an expert on electricity and gas supply in the municipality where I live. What shall we citizens do to make our authorities once again unequivocally committed to the will of the people?
Switzerland is about 90 percent
self-sufficient concerning electricity
Hans Bieri writes that Switzerland is only 55 per cent self-sufficient in the matter of agriculture. In contrast to this, about 90 per cent of Switzerland’s electricity demand are currently produced domestically (about 55 per cent hydropower, 30 per cent nuclear power, 5 per cent new renewables). Although there is still room for improvement by increasing the height of dams, things are happening in the form of the construction of larger solar plants in uninhabited sunny high valleys or on south-facing slopes. Thanks to generous subsidies approved by parliament, several large solar plants are already being planned in Valais and Graubünden - and this is necessary considering the increasing e-mobility and high levels of immigration. If the Swiss nuclear power plants are really to be shut down, as decided by the people, we will really have to get down to brass tacks.
In view of the high proportion of self-sufficiency and the Federal Council’s successful appeals for saving (There is already 10 per cent less electricity consumption), it would actually be logical that Swiss electricity prices should not rise too sharply. And why are they rising anyway – even for the basic supply?
Ukraine war is not the main cause of the sharp rise in energy prices
Andreas Gnos, head of network and technology at Technische Betriebe Wil (TBW), confirms media reports that Swiss households and SMEs on basic supply will have to reckon with an average 30% increase in electricity costs in 2023. However, according to Gnos, the Ukraine war is not the main cause of the expected shortage: only since the failure of a large number of French nuclear power plants has there been a threat of shortage, and this has caused market prices to skyrocket. Prices were highest in August/September.
Many Swiss municipalities have their own power plants and are therefore less exposed to price fluctuations on the market. This means lower electricity tariffs for their population. I had read earlier on the homepage of the Swiss Federal Electricity Commission ElCom that municipalities without their own power plants have to buy electricity “on the market”, but I was imagining (somewhat rashly) that this meant the Swiss electricity market, i.e. the power plants in our country.
Electricity bought at the Leipzig Power Exchange at volatile prices
At the presentation by Mr Gnos of TBW, I heard for the first time that the municipality where I live, and many others, buy their electricity from the Leipzig Power Exchange (!). The suppliers earn well, he remarked.
Well, darn, we did say no to the so-called “opening”, i.e. privatisation of the electricity market 20 years ago in the federal referendum on the Electricity Market Act (EMG) (see Current Concerns of 27 September 2022). A few years later, ignoring the will of the people, the Federal Council and the parliamentary majority decided to partially open the electricity market for larger companies (Electricity Supply Act, in force since 2008). Households, and if they so wish SMEs, are still covered by the basic supply and are entitled to an adequate and cheap electricity supply. But obviously, the choice of exactly how cheap this electricity is to be is not up to the cantons and the power plants; it is decided on the so-called free market. It is noteworthy that for example in the municipality where I live, 70% of SMEs voluntarily remained on basic supply - despite the lure of the then lower energy prices.
At least the electricity prices for households and businesses remaining on basic supply will rise less sharply in 2023 than the prices for businesses that supply themselves on the market. “Why the difference?” I asked the Federal Electricity Commission ElCom. According to Simon Witschi, Head of the Commission Secretariat Section, tariffs are not dependent merely on wholesale market prices, but also on the procurement strategy and production portfolio of an energy supply company. “In principle, [...] electricity suppliers that produce a large proportion of their electricity themselves are less affected by price increases on the wholesale market. However, those electricity suppliers that have already purchased their electricity on the market for a longer period of time may also have lower tariffs. Those that have no or little own production and a more short-term procurement strategy are more affected by the current high market prices (especially if they bought their energy in August) and will therefore increase their tariffs more sharply.” Simon Witschi also mentions other factors, but concludes by saying: “[...] but the fact remains that the high 2023 tariff alternations that may be observed in some cases are due in particular to the higher energy tariffs.” In summary: market prices will be fluctuating even for the basic supply – the more prudent the electricity supplier, the more bearable the surcharges – if we are lucky!
Swissgrid as a “milestone on the path to electricity market liberalisation”
With the above-mentioned law of 2008, Switzerland legally separated the transmission grid from the power plant companies in accordance with EU requirements (without being obliged to do so), in order to follow through on liberalisation against the will of the voters. Our electricity grid has long been firmly integrated into the EU electricity grid, and that is by no means only to the benefit of Switzerland. So (?) we can read on Swissgrid’s homepage: “Since 2009, Swissgrid, as the national grid company, has been responsible for the operation, safety and expansion of the 6700-kilometre-long extra-high voltage grid”. And then they get down to business: “In 2013, Swissgrid took over the grid and thus set an important milestone on the path to electricity market liberalisation.” (https://www.swissgrid.ch/en/home/about-us/company/history.html; emphasis mw)
So it becomes clear that for more than 20 years, the Federal Council and its administrative team have been trying to get the Swiss people to sign an electricity agreement with the EU. As reported in Current Concerns on 27 September 2022, the Federal Council recently wanted to launch the total “opening” – but it caught an unpropitious moment. Now, when many companies want to push back into the basic service because they have to pay astronomical price surcharges in the “free” market, the responsible committee of the Council of States flagged such liberalisation plans down on 9 September.
We must hold fast to certain principles
– Cantonal representatives instead of administrative bodies in Bern
And why does Axpo, which is wholly owned by the cantons of north-eastern Switzerland, not ensure cheap electricity for the basic supply? This is what I asked the responsible state councillor in my canton. She has yet to answer. It is well known that Axpo is a major international corporation that invests in power plants abroad. However, we expect our cantonal governments to look out for their own people first and lay down the law to Axpo, BKW or Alpiq. But cantonal state councillors apparently prefer to spend part of their mandate, which the electorate has handed over to them on trust, biding their time in Bern at the directors’ conferences – in the “House of the Cantons”, where they hear from the federal administration staff what is expected of them. It is true that they might say no once in a while, and from time to time one or the other probably does (unlike with our cantonal authorities, the principle of public access does not apply there, so we cannot always know who said yes or no to what, and when they did so).
– Keep power plants in the hands of the citizens – preferably in the communes or in cooperatives
The responsible federal councillors have been trying for years – with little effect – to dissuade the population from employing the numerous small-scale and democratically organised power companies that stubbornly persist alongside the big energy corporations. The Swiss system is just simply not EU-compatible! The soon to leave office head of the Federal Department of the Environment, Transport, Energy and Communications DETEC, Federal Councillor Simonetta Sommaruga, exercised some level of restraint in this respect, in contrast to her predecessor, Doris Leuthard. In autumn 2017, the latter responded to the question of where politics needed to take action to ensure security of supply: “We need market opening at home and access to the EU internal electricity market. Since the partial market opening a few years ago, there has been no concentration among the 700 or so Swiss suppliers. With so many players and over 8000 tariffs continuing, things will be difficult.” Additional question: “Do you fear that this federalist tangle [!] will bring down the electricity agreement with the EU?” In response, the ever-smiling Doris Leuthard took up the sledgehammer: “The small suppliers resist full liberalisation because their level of suffering is low. [...] We have to talk to the cantons and the Association of Swiss Electricity Companies and say: If you want to continue to be responsible and do business, you have to structure yourselves differently. That will certainly be a difficult discussion.”1
The “many players”, namely the municipalities and cantons as power plant owners, are “difficult” because in the EU there is a ban on state aid. Leuthard therefore recommends “other structures”, namely in a first step the conversion of power plants into joint-stock companies, which could then later merge and sell their shares to private investors. A few months before this interview, in May 2017, the electorate had approved the “Energy Strategy 2050”, in which the electricity agreement with the EU, though long in the pipeline, had not been mentioned at all. In October, Leuthard revealed: “We are ready. All that is needed is a federal decree for the complete opening.”
Today, five years later, almost all hydropower plants are indeed stock corporations, but 100% of the shares of most of them remain in the hands of the municipalities and cantons. Some mergers have taken place, but there are still hundreds of power plant companies in Switzerland. And this does not only apply in the countryside: the power plant of the largest municipality in Switzerland, the EWZ (Elektrizitätswerk Zürich), is a service department belonging to the Department of Industrial Operations of the City of Zurich, i.e. part of the administration! Of its approximately 1200 employees, about 100 work in the canton of Graubünden, where Zurich has held its own power plants for many decades. The “federal decree for complete opening” mentioned by Leuthard was recently rejected by the responsible committee of the Council of States because it would hardly survive a referendum vote in the current situation.
And the icing on the cake: on 24 November 2022, the Federal Council announced that it wants to open a loophole for those SMEs that want to return to the basic electricity supply because they cannot afford the market prices. The conditions: They must join forces with other SMEs to form an electricity network, interconnect their lines and produce at least 10% of their electricity consumption themselves. And they must remain on basic supply for at least seven years. This makes negotiations with Brussels on a quasi-framework agreement construct recede into an even more remote distance; for the framework agreement has been hyped up by the EU since 2014 “as a basic condition for the electricity agreement” (Doris Leuthard).
Yes, we have gotten caught in the EU spider’s web – pardon, electricity grid – rather badly, but we may still place hope in Switzerland’s direct democracy ... After the two world wars of the 20th century, it was a matter of “rebuilding our own dwelling”, says Hans Bieri. “Today,” he continues, “the conditions for ‘restoring our own dwelling’ are, however, being shattered step by step and at an accelerating pace.” It is up to us citizens to put up as much resistance as we can. •
1 Müller, Giorgio V. and Stalder, Helmut. “‘Wir können eine Strommarktöffnung nicht auf ewig aufschieben’ (‘We can’t put off opening up the electricity market forever’). Interview with Federal President Doris Leuthard”. In: Neue Zürcher Zeitung of 28 October 2017.
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