With the nuclear power plants, a monopoly of a few large electricity suppliers soon formed. The local energy suppliers were responsible for the entire process, from the generation of electricity, the distribution via their own distribution network to the billing of consumption with their customers. In this process, they had the local monopoly from power plant operation to grid operation to consumption metering. The consumer had no choice, he had to buy his electricity from the locally responsible energy supplier, there was no alternative. This was only to change with the liberalisation of the electricity market.
Electricity companies have monopoly in the entire federal territory
Energy supply was regulated by the Electricity and Gas Supply Act (EnWG), which came into force in 1935. The law allowed energy supply companies to secure territorial monopolies through concession contracts with the municipalities. With these contracts, they not only secured themselves legally, but also ensured that no third party could also sell their electricity there. This led to the formation of a monopoly in the whole of Germany. The Federal Cartel Office criticised this practice as early as the 1960s. However, the practice lasted until 1998.
EU pushes liberalisation of the electricity market
This practice was to change as a result of the liberalisation of the energy market sought by the European Union. The EU aimed for a Europe-wide energy market to increase competition. All energy suppliers were to be given access to the entire supply network. Fair competition was to be created through the separation of network and distribution.
Liberalisierung tritt 1998 gegen den Widerstand der Konzerne in Kraft
In 1998, the then Federal Minister of Economics, Günter Rexrodt, heralded the “liberalisation” of the energy industry. He did this not entirely voluntarily, because he was forced to implement the European resolutions. The resistance of the electricity companies was great, however, and most managers considered it unfeasible. Their arguments: “Piping foreign electricity through your own grids? That’s not possible! And how is that supposed to be billed? Who would want that? Nobody asked for it!”
Large customers accelerate implementation
But the large industrial customers quickly recognised the opportunity to save costs through liberalisation if they could choose between several electricity suppliers. Liberalisation enabled them to request offers and thus put pressure on their local supplier.
Yellow Strom is the first electricity provider without its own grids and power plants
With the change of large customers, the large energy suppliers prepared themselves for the new situation. They developed energy brands to sell their electricity to private households in other grids. The first electricity provider that had neither its own grids nor power plants was Yellow Strom. Many others were to follow in a short time.
Due to the liberalisation of the electricity market, consumers can now choose from many suppliers
The liberalisation of the electricity market has led to consumers being able to choose their electricity supplier from a wide range of providers.
The following articles have appeared so far in our short series on the history of electricity generation:
Who invented the electric current?
The beginnings of the electrification of Germany
The electricity war over direct current and alternating current
The emergence of interconnected grids
The economic miracle brings nuclear power plants
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