German states aim to strengthen consumer rights as district heating prices rise

Representatives of federal and state consumer protection ministries report an "urgent need for action" in view of recent price hikes in Germany’s district heating market, energy policy newsletter Tagesspiegel Background reports. At the consumer protection ministers' conference in Regensburg on 14 June, ministers said consumers were increasingly exposed to significant price increases from district heating suppliers and laid out a number of measures to prevent disproportionate price hikes. District heating customers often are at the mercy of natural monopolies and bound to long-term contracts with price adjustment clauses that are difficult to understand, writes Tagesspiegel. Due to the complexity of these pricing formulas, consumers are often unable to assess whether price changes are still within the legally permissible framework, according to the ministers at the consumer protecion conference. The responsible state authorities are therefore calling on the federal government to amend the general conditions regulating district heating, taking current consumer protection concerns into account and, in particular, to make pricing and price change clauses more transparent and consumer-friendly.

District heating prices rose by an average of more than 27 percent in the year until April 2024, while prices for other household heating sources (electricity, gas, wood) fell by 3.2 percent overall in the same period, writes Tagesspiegel - in line with a general drop in energy prices since their peak during the crisis in 2022. The price developments in the district heating sector therefore are the subject of ongoing legal proceedings by the Federation of German Consumer Organisations (VZBV) and investigations by the Federal Cartel Office. The VZBV wants to see the price clauses abolished entirely and replaced by price regulation, as is the case with electricity. "The existing rules do not protect consumers sufficiently," said state secretary Christiane Rohleder from the environment and consumer protection ministry. “We need clear regulations on which costs can and cannot be passed on as part of price changes. We need to expand the state's supervisory powers and need strong protection against heat lockouts so that no one's heating is turned off in winter."

The federal government last year announced plans to connect 100,000 buildings to district heating annually in a bid to bring the sector closer to its climate targets. Cities and municipalities in the country are obliged to map in detail which technology is suited best for decarbonising the heating sector in a given area in the next years. Possible solutions include centralised district heating and decentralised applications such as geo- or solar thermal heating, electrically powered heat pumps or biomass-based systems.