Government calls for opening up of electricity market

Switzerland's electricity industry could soon be liberalised Keystone

The Swiss government has called on voters to support legislation designed to liberalise Switzerland's electricity market.

The new law will go to a nationwide referendum on September 22 and follows moves across Europe to open up power markets.

At a press conference to launch the government’s campaign in favour of the legislation, energy minister Moritz Leuenberger said liberalisation of the electricity market was already happening, and that by supporting the new law, voters could ensure that the process took place in a controlled and fair manner (see related article).

“The choice for voters is not whether liberalisation takes place or not,” said Leuenberger, “but whether we ensure the process takes place in a controlled way.”

For his part the economics minister, Pascal Couchepin, said liberalisation could be especially good for small businesses in Switzerland which, he said, were currently paying around 30 per cent more than the European average for electricity.

Choice of suppliers

If voters support the proposals, consumers will be able to choose their electricity supplier once the market is fully liberalised, a process expected to take six years.

The new law also foresees the setting up of a national network company, in order to ensure third party access to all parts of the grid.

Supporters of a liberalised electricity market say all consumers will benefit from the new law. A group representing three of the four main political parties said the price of electricity would fall by around 15 per cent.

Controversial proposals

But despite the government’s firm backing of liberalisation, the proposals have caused controversy in Switzerland.

Members of Switzerland’s major environmental groups, such as the Green Party and the World Wide Fund for Nature, have been unable to agree on whether to support or oppose liberalisation.

The mayors of four Swiss towns, including the mayor of Bern, Klaus Baumgartner, have jointly called on voters to reject the new law, saying it will lead to higher electricity prices for ordinary people.

“You’d have to believe in Santa Claus to really believe that these big electricity companies will do anything to benefit small consumers,” said the mayor of Lausanne Daniel Brélaz.

The mayors also accuse the Swiss government of slavishly following European Union policy, which envisages a gradual deregulation of Europe’s electricity market over the next few years.

Rural problems?

Some opponents of the new electricity law have also suggested that it will lead to unfair treatment of small rural communities, because the new private providers may charge higher prices in such regions.

However, the Swiss association of alpine cantons has come out in favour of the new law. The association believes the controlled liberalisation envisaged in the law will protect rural regions from higher prices.

And the association is pleased that the new law puts an emphasis on the promotion of hydro-electricity, which is a big provider of jobs in the alpine regions.

California blackout

Opponents of liberalisation point to the example of California, where huge debts incurred by privatised power companies led to large sections of the state suffering electricity blackouts in 2000 and 2001.

The power crisis eventually cost California $50 billion (SFr75 billion). Other European countries too have experienced only limited success in the process of power deregulation (see related article).

But supporters of liberalisation claim that the Swiss model contains enough checks and balances to ensure that the example of California could not be repeated in Switzerland.

by Imogen Foulkes

key facts electricity

Switzerland’s electricity industry accounts for 20,000 jobs.
There are 1,200 electricity utilities in Switzerland.
Some 55 per cent of Swiss electricity comes from hydro-electric power, 40 per cent from nuclear power.
Switzerland’s small businesses buy SFr 3.5 billion worth of electricity every year.