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07 September 2020
The Swiss Competition Commission (ComCo) recently fined two local energy suppliers for abuse of a dominant position in the natural gas market. The suppliers' refusal to grant third parties access to their pipeline grids was qualified as an unlawful refusal to deal. The decision opened up the gas market in central Switzerland (for further details please see "ComCo opens up gas market in central Switzerland").
This decision has already had an impact, as electricity suppliers have begun to enter the natural gas market.
ComCo's opening up of the gas market based on the Cartel Act had an immediate impact on energy suppliers in Switzerland. One day after the decision was announced, Berne-based electricity supplier BKW announced that it will enter the natural gas market. BKW claimed that in future, customers will be offered a package solution for natural gas and electricity procurement at favourable rates. The target group is large consumers with an annual demand of more than 100MWh (ie, larger companies in the industrial, real estate and gas supply sectors (public utilities)).
BKW's quick reaction suggests that it has been considering this idea for some time and that the ComCo decision has laid the legal foundation for its implementation of these plans.
In 2007 the Electricity Supply Act was introduced, allowing end customers with a sizable consumption to choose their electricity suppliers freely. In April 2020 the Federal Council requested a draft modification of the act to open up the electricity supply market to all end customers regardless of their yearly consumption. The consultation procedure regarding the modification of the act has now been completed and a new draft is expected at the beginning of 2021.
In contrast, the regulation of natural gas supply is limited in Switzerland. In 2019 the Federal Council released a new Gas Supply Act for consultation until February 2020. The draft does not fully open up the market; rather, it provides that only end customers with an annual consumption of at least 100MWh (ie, approximately 10% of end customers in Switzerland) can choose their suppliers freely. Various consulted stakeholders, including ComCo, requested a full regulatory opening up of the market. If the current draft of the Gas Supply Act is approved, the Swiss gas supply market is expected to undergo a two-step opening up similar to that of the electricity supply market (ie, large customers first, followed by all other customers).
However, there is still a considerable regulatory gap compared with the European Union, whose natural gas market has been fully open to all end consumers in all EU member states since July 2007. In other words, everyone is free to choose their supplier, including small consumers such as individual households. Despite recent developments, it will take years for the Swiss energy markets to be fully liberalised.
The recent legal developments reinforce the shift from pure electricity suppliers to integrated energy suppliers which also supply natural gas. The large Swiss electricity companies are already active in the natural gas markets abroad and know the respective market trends. It seems likely that more suppliers will soon enter the Swiss natural gas market.
In addition, customers have increased the pressure on energy suppliers to also offer natural gas. In particular, public utilities want to purchase natural gas as well as electricity. Therefore, the market largely depends on the large customers and which offers and services they expect from their suppliers.
ComCo's recent decision has reinforced the shift towards integrated energy suppliers which offer electricity and natural gas. However, the Swiss energy market is still years away from complete liberalisation. It remains to be seen which approach the legislature will take regarding the further opening up of the Swiss natural gas and electricity markets.
For more information please contact Marcel Meinhardt or Damian Joho at Lenz & Staehelin by telephone (+41 58 450 80 00) or email (firstname.lastname@example.org or email@example.com). The Lenz & Staehelin website can be accessed at www.lenzstaehelin.com.
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