The Austrian Parliament has passed a bill to liberalize the country’s electricity market, Reuters reports, but legal challenges are expected, according to experts. Under the terms of the legislation, competition will be phased in from February 1999.
From that month, all companies which use more than 40 GWh each year will be able to chose their supplier, either from within Austria or from outside the country. The introduction of this was necessary to comply with European Union (EU) rules.
However, existing long term supply contracts between the national grid operator Verbund, which also generates over half the country’s power, and regional utilities will be protected until 2003. While the government considers this an acceptable compromise, critics believe it contravenes EU law, and will leave Austrian companies unable to compete with foreign suppliers, because companies committed to buying from Verbund will not be able to respond to competitive pressures forcing tariffs down.
The legislation will result in around 30 per cent of the Austrian market becoming open to competition. EU regulations require a minimum of 25.4 per cent. Medium sized customers in Austria currently pay around $0.007/kWh for power. This is the second most expensive power in the EU; the most expensive is in Germany.
