AGFW rejects demand for price supervision

30.01.2025

Source: E & M pwoernews

The central district heating association AGFW criticizes the demands of the Federation of German Consumer Organizations and firmly rejects price regulation.

Shortly before the Bundestag elections, the Federation of German Consumer Organizations (VZBV) complains that there are "glaring deficits in the regulation of heating networks". The consumer advocates refer to a report by the Forum Ökologisch-Soziale Marktwirtschaft (FÖS) and the Monopolies Commission and suggest setting up a price supervisory authority in the district heating sector. This would have the task of setting an upper limit for heating prices and monitoring compliance.

The VZBV also believes that a law is needed to regulate fundamental aspects of the organization of the heating market. Legislators must clarify how the high investments required to decarbonize heating networks can be financed fairly, the association demands. Affordable district heating is an important building block for the success of the heating transition.

AGFW warns against too much price regulation

However, AGFW Managing Director Werner Lutsch warns of the consequences of nationwide price regulation: "Such a proposal would jeopardize the politically desired expansion of heating networks and, in concrete terms, the achievement of climate targets in Germany. As a look at our neighboring countries shows, price regulation does not lead to lower prices."

The heating transition requires immense investment and other, generally more expensive, fuels and technologies. A price cap, which the Monopolies Commission wants to align with electricity prices for heat pumps, is therefore completely unsuitable. "This is comparing apples with oranges," explains Lutsch. "District heating prices are based on both operating and investment costs. A pure orientation towards electricity prices would exclude the investments in the heating system and in the building-side measures."

According to the AGFW, the approach of regulating costs and revenues based on electricity and gas grids, which is also being discussed, cannot be applied to the heating network sector. There are more than 4,000 heating networks throughout Germany. Effective cost and revenue control would have to take place individually and would therefore involve disproportionate effort and costs.
According to Lutsch, the goal of stable and affordable heating prices would not be achieved through excessive regulation. The energy and heating transition is a task for society as a whole that affects suppliers and consumers alike. "Politicians must finally create the necessary framework to strengthen investment in heating networks," Lutsch demands.

The association signals openness to further development of the existing framework conditions, but warns that only a reliable and investment-friendly environment can secure the expansion of district heating and achieve the climate targets. This includes improving the funding framework.

The report "Design of a nationwide price supervisory authority for the district heating sector" commissioned by the Federation of German Consumer Organizations can be found on the VZBV website.

Author: Heidi Roider