PersGV-StG

While Germany's default supply (German: Grundversorgung) of electricity and gas ensures security of supply for consumers, it also inhibits competition and leads to disproportionately high prices. Inactive households often remain permanently in expensive default tariffs, providing German default suppliers with a quasi-monopolistic distribution channel. Furthermore, the EU has called on its member states to take measures to protect vulnerable consumers, in particular to combat energy poverty.

Against this backdrop, the Wuppertal Institute has produced a report on behalf of the Federation of German Consumer Organisations (German: Verbraucherzentrale Bundesverband, or vzbv for short) that addresses the following questions regarding the default supply of gas and electricity in Germany:

• What alternatives – possibly including competitive ones – exist to the current system of default supply?
  • How should these be assessed, particularly in terms of their impact on gas and electricity prices, as well as security of supply?
  • Should different approaches be taken for electricity and gas in default supply?
  • What default supply models exist in other EU countries – and what can be said about them?
• How many households in energy poverty are currently on default supply?
• Does a lack of creditworthiness prevent many energy-poor households from switching from default tariffs, or do other reasons prevail?

The PersGV-StG project team employed a mixed-methods approach: qualitatively through expert interviews, forum research, and country comparisons; quantitatively based on a population-representative online survey. Based on the current legal framework, the researchers evaluated three reform models, using SWOT and criteria-based analyses, complemented by a brief assessment of social and energy-saving tariffs.

The survey shows that poor creditworthiness is rarely decisive for remaining in default tariffs. More important are satisfaction, loyalty, underestimated financial benefits of switching, and perceived barriers, such as the effort or complexity involved in switching.
In the short term, the project team recommends "mandatory transparency": Default suppliers should be obliged to proactively inform household customers with default tariffs about their most favorable tariff, including the potential savings. Swift implementation of the measure would be possible, as it draws on the current system of default supply and entails no substantial modifications. In the longer term, structural reforms toward more socially oriented tariffs are necessary, say the researchers. Approaches such as an "energy minimum", i.e. a minimum quota at a regulated price, or mechanisms used in other EU countries – such as debt separation in Austria or protection against arrears in France – can provide guidance.

The report initiates the debate on the further development of Germany’s model for the default supply of gas and electricity. It represents an example of transformative research, as it identifies systemic barriers to a socially just energy transition – and, by integrating social and energy law, delineates concrete solution corridors for both policymakers and market stakeholders.