The liberalised gas market

The liberalization in Germany

The German gas market was opened up to competition by an amendment to the energy law in 1998 (New Energy Industry Act of 24 April 1998). Additional regulations for market liberalization were contained in a 2003 amendment to the energy law (First Law on the New Energy Industry Act of 20 May 2003). The Second Law on the New Energy Industry Act of 7 July 2005 transposed EU Directive 2003/55/EC of 26 June 2003 into German law. Under this directive, all European energy consumers, both households and industrial customers, must be able to benefit from a fully liberalized market by no later than 1 July 2007.

Directive of the European Parliament and of the Council

The liberalized gas market in Europe

The 1998 energy law amendment opened up the electricity and gas supply markets to competition. Energy suppliers had previously had a monopoly in their respective supply areas. The liberalisation of the gas market Europe is therefore a revolutionary step. It aims to create more free competition on the gas market and ultimately a more efficient European internal market.

The energy law amendment of 20 May 2003 contained regulations on market liberalisation, focusing particularly on the gas market. When the 2005 amendment came into force on 13 July 2005, there was a transition from negotiated to regulated network access based on the 2003 internal market directives for electricity and gas. All these laws are national transpositions of a European framework directive, under which Europe's electricity and gas market must be fully liberalised and accessible to all energy consumers by 1 July 2007.

What is the aim of this reform?

Because competition calls for unhindered third-party access to supply networks, the reform focused on creating entitlements to network access.

What does this mean for you as customers?

Market liberalisation means that you as customers are free to choose your gas supplier. Gas suppliers, meanwhile, can offer their products and services throughout Europe.

Who benefits from gas market liberalisation?

Ultimately, all consumers and distributors may benefit from increasing market competition. In legal terms, all consumers in Germany are free to chose their gas supplier since 1998. In reality, only large end users such as industrial customers and distributors, as well as energy generators may currently benefit from the gas market liberalisation. The new gas network access model to be implemented in the gas year 2007/08 will cover all areas of feeding, transport and supply alike, and will allow all consumers to change their gas supplier much easier. Consequently, this will enable them (including private household customers) to conclude a contract with a gas supplier of their choice.

What are the practical effects of liberalisation?

• The gas market is opened up to competition.
• The purchase and sale of gas is divided up into two areas of activity: transmission and distribution.
• There are a number of different suppliers on the market. They use the same network.
• End users and distributors conclude a contract with the supplier of their choice.
• The gas price is made up of the price of the product, the price of transmission - including distribution over the network - and various taxes and charges.

How is the overall gas supply price calculated?

Two components influence the overall gas supply price:

• Product price: As an industrial customer, this is the only price that you negotiate when concluding a contract with your gas supplier. The price will depend on consumption volumes, your consumer profile, the services provided by the supplier and the guarantees given. Transmission costs will also form part of the price, unless you yourself conclude a network access contract with the system operator.
• Transmission costs: Price-setting and invoicing are the responsibility of the transmission system operator, but the costs are checked and approved by the Federal Network Agency or regional regulatory bodies. These costs arise from the system operator's investments in building, maintaining and operating a safe and reliable infrastructure.