Deregulation of the Swiss electricity market

BKW welcomes the complete deregulation of the electricity market. Deregulation is a driver of innovation and efficiency, creates freedom of choice and greater transparency for customers.

Free choice of electricity supplier

Large-scale customers with electricity consumption of 100,000 kilowatt hours per year or more have been able to choose their electricity supplier since 2009. This first stage of deregulation was successful. Now, all customers in Switzerland will benefit from the option to choose and thus from greater transparency, efficiency and innovation.

BKW welcomes this important step towards more free enterprise and competition. It therefore favours the Federal Council’s draft of the new Electricity Supply Act (ESA) submitted for consultation. However, with the aim of ensuring an efficient market for the benefit of the economy and customers, BKW firmly rejects the unnecessary and distorting regulations.

Requirement for the EU electricity agreement

The complete deregulation of the Swiss electricity market is also a condition for a future electricity agreement with the European Union. Switzerland is integrated into the European system in many respects – not least because of the physical network.

Frequently asked questions

Complete deregulation will enable all customers to freely choose their electricity supplier. This benefits the entire Swiss economy. The size of the market and the number of potential suppliers ensure effective competition.

BKW supports the basic supply requirements proposed by the Federal Council. However, explicit regulation of end customer prices is neither necessary nor sensible. It would not achieve the goal of an effective market and would result in high administrative costs. It would be better to monitor the market for abuses, which has been successfully done in most electricity markets in Europe that have been completely deregulated (e.g. Germany, Austria, Benelux).

BKW welcomes the quality standard of a standard product envisaged in future for the basic supply (standard Swiss electricity from renewable energies). A number of electricity supply companies already offer such basic supply products, including BKW with its “Energy Blue” and “Energy Green” products.

In order to prevent competitive distortions in the electricity market, there are already strict unbundling rules separating network operations from other activities. According to the draft of the revision of the Electricity Supply Act, network operators will continue to be responsible for the basic supply. In the context of a complete market deregulation, however, this would run counter to the system, be inefficient and make innovation more difficult. The lack of compatibility with the unbundling rules in the EU – in the event of the conclusion of an electricity agreement with the EU – would make it necessary to revise the new Electricity Supply Act as soon as it enters into effect.

BKW is firmly against the option of a quarterly or even monthly classification of electricity quality as proposed in the draft. It creates no added value and will lead to additional administrative effort and added costs. Simulations show that a quarterly documentation of quality does not provide any new incentives for investments in renewable energies. True investment incentives would be created by, for example, an adjustment of the water rate regime – the current regime should be replaced with a flexible model.

A strategic storage reserve that can bridge critical supply situations towards the end of winter is a sensible tool for critical extreme situations. However, the storage reserve cannot ensure (re)investments, which are urgently necessary for long-term reliability of supply. BKW made constructive suggestions involving a market-based capacity mechanism, which is already used successfully in other European countries, back in 2016.

A partial liberalisation of the measurement process – involving only 55,000 out of approximately 4 million metering points – will not result in functional competition. This is because only some of the grid operator’s duties can be carried out by third parties according to the draft submitted for consultation. This would result in additional effort and expense with no additional benefits for the grid-connected parties. Experiences in other countries, especially in Austria and the Netherlands, also show that a complete liberalisation of the measurement process does not create a more competitive market – which would likely be the case in Switzerland as well because of the generally small size of the market. BKW therefore rejects a partial deregulation of the measurement process and instead favours a paradigm shift involving the liberalisation of measurement data.

BKW supports and encourages a paradigm shift: customers should be able to share data collected using decentralised (private) measurement infrastructure – in particular, via smart home apps – with the grid operator for market and billing purposes. As a result, the grid operator would no longer have to install meters. This would promote the replacement of central structures with decentralised structures and prioritise customers’ needs. Of course, customers will continue to be in control of their data.