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Verbund challenges German grid operator over power price zone split with Austria

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Verbund challenges German grid operator over power price zone split with Austria

Austrian utility VERBUND AG is taking German grid operator TenneT TSO GmbH to court in a bid to reverse a decision that split the previously joint power price zone between Germany and Austria last October.

Austria's largest power producer is accusing Tennet of abusing its dominant market position by effecting the split to shift internal German electricity bottlenecks to the border with Austria, an "anti-competitive" measure that is weighing on Austrian industry and reducing liquidity in the country's forward power market.

Verbund is taking its case to the higher regional court in Vienna and Energy Exchange Austria, steel group Voestalpine AG and Austropapier, the association of the Austrian paper industry, are joining the utility in the court challenge, it said.

"There was and is no structural grid congestion on the border between Germany and Austria," Verbund said in a press release announcing the move on Jan. 8.

The company said the technical border capacity is up to 10.7 GW at the moment but only 4.9 GW of long-term capacity, plus daily variable remainder volumes, has been available for trading since Oct. 1, 2018, when the zones were split. The two countries had shared a common price zone since the 1990s.

Tennet, which is one of four transmission grid operators in Germany and a subsidiary of Dutch TSO TenneT TSO BV, said it was surprised by the court challenge.

"[We] see no reason to move away from a joint decision by five European TSOs and the national supervisory authorities, which is also supported by the European Commission," company spokeswoman Ulrike Hörchens said in an email.

According to Verbund, the split is already causing prices for German and Austrian power trading products to diverge and, based on current forward prices for electricity, will cost Austrian end customers at least €180 million per year. Two-thirds of that additional burden will be shouldered by energy-intensive industries, including metal, paper, glass and chemicals, the company estimates.

Verbund also claimed the separation goes against EU ambitions to create a common European electricity market and pointed to a case from 2010 that it says sets a precedent for its challenge against Tennet. Back then, the European Commission forced Sweden's transmission grid operator to increase trading capacity with its neighbors to drive down prices for end-use consumers.

Verbund and Energy Exchange Austria had opposed the market split from the start and unsuccessfully tried to convince the German government and EU regulatory agency Acer to leave the common price zone in place, according to energy news service Montel.