Germany: Trend toward re-municipalisation of energy sector

(November 2011) A little after a decade after the onset of liberalisation and privatisation, the German energy sector is experiencing a return to public and communal ownership. Since 2007, 44 new local public utilities (Stadtwerke) have been set up and more than 100 private concession contracts for energy distribution networks and service delivery have returned to public hands. Entire regional networks have been sold by the large energy corporations to the public regional authorities.

Public opinion in Germany is now critical of energy privatisation, especially because prices have risen sharply, and supports (re-)municipalisation – the return of privatised public services into local public ownership and managerial control.

One key factor behind this trend is the desire of a growing number of public authorities to strengthen their influence in the energy sector, and at the same time increase public revenues through the provision of energy and the management of grids. For these reasons, remunicipalisation is supported by the Green, Social Democrat and Left parties, and by associations of public institutions like the Association of Communal Enterprises (VKU) – and even by some local party groups of the centre-right Christian-Democrats.

At the same time, many citizen campaigns and public referenda initiatives are taking place in major cities like Hamburg, Stuttgart, Bielefeld, Bremen, Frankfurt and Berlin. This builds on the campaigns and referenda which successfully defended Stadtwerke from privatisation in previous years, for example in Leipzig.

Democratic control, innovation and workers’ rights



EPSU affiliate ver.di and the DGB trade union confederation support the return to local public utilities as a new chance for public service provision and a means to increase democratic control of public services. But they argue that remunicipalisation has to facilitate necessary innovations in smart grids, renewables and electric vehicles; as well as strengthen workers’ rights and secure jobs in municipalities and communities. The unions have had some bad experiences with public employers in the past and so not all ver.di’s local organisations back public campaigns for remunicipalisation.

Contracts due for renewal



Almost all existing contracts in the energy sector are up for renewal in the period up to 2016. Around two thirds of all German communes are considering buying back both electricity suppliers and the distribution networks. There are currently 850 Stadtwerke – some partly-privatised public-private partnerships – that hold over half of the energy market. The expectation is that more and more are going to become 100% owned by public authorities, and their market percentage is likely to increase sharply in the coming years.

Regulation and profits



German and EU regulators have insisted that the major private companies sell some of their operations after takeovers of other large companies. In addition, the companies want to reduce their debts, by selling some of their operations. As a result, the corporations have had to sell networks – and the only feasible buyers are the regions and municipalities.

Contradictions



Despite its success, re-municipalisation remains a contradictory process because its consequences for the sector as a whole are far from clear. While proponents argue that remunicipalisation should be more than the return to public ownership, and could lead to further democratization and participation, German legislators and the regulatory body favour remunicipalisation in order to drive commercial competition in the sector.

The danger is that the new Stadtwerke turn into corporatized public utilities that compete with private corporations for a piece of the energy market, as the VKU proclaims is the case. That’s why the DGB has called for trade unions to seek broad alliances in civil society, for example in public referenda, in order to demand remunicipalisation that would heighten economic democracy rather than increase commercial competition.

Ver.di’s conditional support



Ver.di also recognizes the potentials of remunicipalisation but fears that the profit maximisation objectives adopted by some public bodies can obstruct wider objectives on public service delivery, environmental sustainability and labour rights. Consequently the union sets clear conditions for supporting re-municipalisation, which it reviews case by case.

This is a summary version of a more detailed article (below) which gives more examples of the re-municipalisation that has been taking place in the energy sector across Germany.


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