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A German Town Tries to Live Without Big Energy

By Nils Klawitter

Börnsen, Germany, is a tranquil little place. When farmers there need a barbeque grill for their village festival, or money to renovate the local kindergarten, they ask "Walter" down at the village hall.
Walter Heisch is mayor of this village near Hamburg. "Just about everyone knows everyone else," he writes on the community's website. "We see each other at the grocery store."

When it comes to the issue of energy, though, tempers rise, and Heisch turns into a combative village elder -- a figure straight from the Asterix comic book series, as the miniature of Gallic chieftain Majestix on the mayor's desk suggests. And that's when Börnsen turns into a tiny pocket of resistance.

The enemy, in this case, is the German energy firm E.on.

Börnsen has shown E.on's local subsidiary in the state of Schleswig-Holstein, E.on Hanse, how a small town can escape domination by a corporate energy giant by producing its own electricity and gas -- and how an average family can save about €75 ($100) a year in natural gas costs alone.

The statistics are from a state-wide price comparison prepared by Germany's Federal Cartel Office late last year, and they paint a picture of a village where quite a bit functions without support from the all-powerful utility.

Since E.on doesn't want Börnsen to give other municipal energy suppliers ideas, though, the giant utility has decided to pull out of Börnsen's energy-saving venture. The giant is defending itself, and that has Börnsen residents up in arms. "E.on is a bad word in Börnsen," says Joachim Reuland, head of the village-run utility, "Gas und Wärmedienst Börnsen GmbH," or just GWB.

A village-sized power supply

Ten years ago, Börnsen residents decided to build small communal heating power stations, powered by natural gas, which now supply heat to new housing developments and electricity to 80 percent of the village. The boilers at the three miniature power plants are "filled with a magic potion," says Reuland with a smile.

Börnsen has simply gotten a jump on what the major municipal utilities want to pursue as part of the gradual deregulation of the European energy market: Many German cities and towns want to reduce their dependence on big energy firms by building their own local power plants. The public works departments of eight German cities -- including Hanover, Frankfurt am Main, and Munich -- came together just last week to form an alliance that could become a fifth major player in a market dominated by a virtual cartel of four companies: E.on, RWE, Vattenfall and EnBW.

The project in Börnsen started with a citizens' initiative to secure a greener local energy supply. The village's proximity to the Krümmel nuclear power plant only 12 kilometers (seven miles) away -- and nightly alarms that brought half the village into the streets in pajamas -- had caused a lot of disgruntlement. Reuland co-founded an initiative to establish the local utility, GWB, in 1996. A municipal gas utility called Hamburger Gaswerke (in nearby Hamburg) served as a supplier and owner of a 40 percent interest in the company.

This arrangement worked well until four years ago, when E.on Hanse acquired Hamburger Gaswerke. That was when "all the hullabaloo" started, according to Mayor Heisch.

He says E.on asked the village to abandon its gas supply concept. "Instead of using our communal heating power stations, E.on wanted people to buy natural gas from them," says Heisch, "because that way there was more profit in it for them ... They wanted a 12-percent return."

E.on Hanse spokesman Carsten Thomsen-Bendixen disagrees, but only with the "specified amount" of the demand. He says everything was discussed and agreed on with the village. But village officials weren't prepared when E.on cut funding to GWB. "They essentially froze our accounts," says Heisch.

Reuland, who runs GWB in his spare time, looked into defense strategies. The village couldn't easily renege on its contract with E.on as the initial supplier of gas for the local plants; but Reuland found other ways to influence prices. His ideas were so inventive, in fact, that the Börnsen example could cause trouble beyond the borders of Schleswig-Holstein.

Following in big utilities' footsteps

Reuland's first move was to hire Vattenfall, an E.on competitor, to provide less expensive maintenance for Börnsen's power plants. Börnsen also found a way to save money on the purchasing end: Since last year, GWB has derived 25 percent of its natural gas requirements from Denmark. Also, in 2004, it was discovered that the sum of residents' individual meter readings was almost two percent higher than the amount of gas Börnsen purchased from E.on. Village officials suspect that for years residents had been paying for more than they received -- which explains why a single, municipal meter has replaced all the individual meters. The German Association of Energy Consumers confirms that this is not an isolated incident in the industry. E.on Hanse had no one who could comment on the meter dispute.

But then the villagers tore up a field and started to build a tube-shaped storage tank 100 meters (328 feet) long about a meter wide. They had a right to do so because the village had bought up its own gas network in 1997. But it was a cowboy maneuver: "At night, when the gas is cheaper, we open up the valve and fill the tank," says Reuland, "and during the day we keep it shut."

Reuland claims GWB is just following in the big utilities' footsteps. "They don't owe their wealth to the market successes of some young, dynamic managers, but to what their fathers and grandfathers had the foresight to keep buried safely underground" -- like the networks and storage tanks.

Since the gas price was based on a customer's "peak load," which the storage tank kept artificially low, E.on stood to lose quite a bit of money -- a realization that prompted its representatives on the GWB board of directors to halt the tank project. E.on also recently installed a co-director to run GWB together with Reuland. Although he rarely makes an appearance, he has to power to veto all board decisions.

All told, Börnsen has invested €13 million for its independent utility -- a huge investment for a community with only 3,800 residents. But over €3 million in loans has already been repaid, and in the long term the village isn't exactly in a bad position. It owns a natural gas network and the beginnings of an electricity grid. And Börnsen officials found a way of their own around the storage tank blockade: Funding for the tank was simply approved as part of a supplementary budget, where a simple majority was enough to approve the plan.

Reuland smiles at the village's community spirit. "We can be insufferable," he says, "when we work together."

Translated from the German by Christopher Sultan