Swiss power supply – planned market liberalisation will bring new uncertainties

The Electricity Supply Act (StromVG) is currently being reworked at the federal level. The restructured law, which will be in the consultation phase until 31 January 2019, will pave the way for the long-planned, complete liberalisation of the market. The core component of the bill is the ability to choose your electricity supplier, independent of annual consumption. However, the draft of the bill shows that a number of important topics that are vital for utilities companies are not being taken into consideration and are creating new challenges.

According to the StromVG, utilities are still required to provide basic services that are based on domestic and renewable energy sources. The larger the difference between the increased basic service prices and market prices, the more customers will switch from the state suppliers to the free market. For utilities companies, this means eroding revenues and profits, or exposure as possible takeover targets. At the same time, rates for basic services will no longer reflect the actual production costs. Instead, they will increasingly be based on market prices. Without the ability to sell their expensive long positions such as proprietary power plants or long-term supply contracts, the utilities will suffer further existential losses. The bottom line is that the new StromVG will have wide-ranging repercussions that will require prompt and careful attention by the individual companies.

Utilities: reacting to new risks

The new StromVG stipulates further liberalisation of measurement systems for certain customer categories, i.e. free choice of metre-reading companies for electricity consumption or grid feed-ins. In complex operations, this increases the risk for utilities of violating new and changing data protection directives. This risk can of course be handled with continuous updates to IT systems, but that not only increases dependency on IT in general, but also increases susceptibility to cyber attacks. In order to guarantee the highest level of supply security, utilities will need to be increasingly innovative and place more focus on the changing needs of their customers. Employees at utilities companies will also have to be ready to tackle the changing landscape. In short, utilities will need to take their futures into their own hands, using a range of customised measures.