New national power grid firm goes online

swissinfo.ch

A new company has taken over the operation of Switzerland's national power grid, anticipating changes in the electricity market.

But ownership of swissgrid, set up by six major power producers, is still being discussed by parliament.

The company was formed ahead of major changes afoot in the electricity market. Swiss electricity legislation is currently being revised and discussions about a bilateral agreement with the European Union are supposed to get underway.

The EU has decided to open up its own market as of next year, but Swiss voters have been wary of such a move, rejecting a first proposal to liberalise electricity supply in 2002.

Parliament, which hopes to cut power costs, still wants to proceed with liberalisation.

The House of Representatives upped the planned pace earlier this week. Until now, parliament had decided to open the market in two stages, letting major users such as big companies choose their supplier for the time being, followed by others five years later.

But the house decided to let small and medium-sized companies join the front of the queue. The only requirement is that these firms must work together to reach a minimum level of power consumption.

Swissgrid is supposed to fulfil part of the requirements of a liberalised electricity market. Taking over from the former grid coordinator Etrans, it will have the right to set the rate for carrying power.

No oversight

For the moment, the company will not have to submit its prices for oversight but a regulatory body is being planned as part of the new legislation.

Nobody is expecting price-fixing, as Swissgrid will have a monopoly on the market. The future electricity commission will ensure that rates remain reasonable, according to Walter Steinmann, head of the Federal Energy Office.

“Investors should not expect high rates of return,” he added.

Discussions are still ongoing about the ownership of the grid. For the moment power companies are reluctant to relinquish their grasp on the power network.

But if parliament gets its way, Swissgrid will become the owner of the network with the electricity companies’ status switching to that of shareholders. Both Houses have approved the change.

“It’s a political solution,” said Hans Schweickhardt, president of Swisselectric, the power companies’ association. He warned that problems would crop up when the network, which is already operating at almost full capacity, will have to be extended.

Schweickhardt added that producers might be forced to cut power in some areas to respond to strong demand in others.

But Steinmann believes it will never come to this. A group of experts is already considering the expansion of the network, and must take into account regional policies.

swissinfo with agencies

Key facts

Swiss electricity market 2005:
Imports from European Union: 47 billion kWh (kilowatt hour).
Exports to EU: 40.7 billion kWh.
Electricity consumption: 61.6 billion kWh

In brief

Switzerland currently produces some 40% of its electricity from five nuclear power reactors while most of the rest comes from hydropower.

The Swiss power industry, while part of the European network, is largely self-sufficient.

Switzerland is a major trading centre, with annual electricity imports and exports often totalling up to ten times the European average.

Moves are underway to negotiate a joint electricity treaty between Switzerland and the European Union.

Earlier this year parliament in principle approved a gradual liberalisation of the Swiss electricity market, four years after voters rejected more far-reaching plans.