The Swiss Competition Commission recently fined two local energy suppliers for abuse of a dominant position in the natural gas market. The suppliers' refusal to grant third parties access to their pipeline grids was qualified as an unlawful refusal to deal. This decision has already had an impact, as electricity suppliers have begun to enter the natural gas market.
The Swiss Competition Commission (ComCo) recently reviewed whether Energie Wasser Luzern Holding AG and Erdgas Zentralschweiz AG had a dominant position in the natural gas market and whether their refusal to grant grid access qualified as an unlawful refusal to deal. The undertakings ultimately concluded a consensual settlement with ComCo which – combined with the future Gas Supply Act – will likely improve competition in the gas supply market.
A consultation on the revised Electricity Supply Act has shown that a majority of people support a full market opening, but that more incentives for investment in domestic renewable energies and planning security are desired. The amendments envisaged by the Federal Council will enable Switzerland to increase electricity production from renewable energies, better integrate such electricity into the electricity market and strengthen its supply security.
This article provides a non-exhaustive analysis of the legal situation regarding trading with natural resources in Switzerland, with a primary focus on new regulations and reference to foreign financial institutions. At the beginning of 2020, a new regulation came into force which also affected trading with natural resources. In general, trading in physical commodities does not require a licence, whereas trading in securities or derivatives on a commercial basis is subject to licensing requirements.
The government recently confirmed its proposal to fully liberalise the Swiss electricity market. This liberalisation will be accompanied by measures which strengthen domestic renewable energies and improve supply security. It is now up to the Federal Department of the Environment, Transport, Energy and Communications to submit a discussion paper to the government setting out the key parameters for such liberalisation and additional adjustments to be made to the Electricity Supply Act.
The CO2 Agreement between Switzerland and the European Union aims to link the Swiss and EU emissions trading systems (ETSs) to allow energy-intensive industries which currently participate in only the Swiss ETS to access the more dynamic EU emissions market. As under the current regime, the CO2 tax on fuels will be reimbursed to plant operators participating in the Swiss ETS at their request; however, a new exception applies to so-called 'fossil-fuel thermal power plants'.
Swiss voters recently adopted a revised Energy Act. The new law includes extensive measures to reduce energy consumption, increase energy efficiency and promote renewable energy. In particular, the revised act aims to promote energy from water, sun, wind and geothermic energy produced in Switzerland. Existing hydroelectric power plants will temporarily obtain subsidies and the construction of new nuclear power plants will be prohibited.
Swiss voters were recently called on to decide on the popular initiative for an orderly withdrawal from the nuclear energy programme. The initiative called for a revision of the Federal Constitution to ban the operation of nuclear power plants generating electricity and shut down all of Switzerland's five existing nuclear reactors by 2029, notably by restricting their operational lifetime to 45 years. However, it was rejected by 54.2% of voters and 20 of the 26 cantons.
In a recent case, the Supreme Court finally addressed the question of what the consequence for failing to comply with a mandatory pre-arbitral condition should be. The decision is particularly important for international construction contracts and other contracts in the energy sector, which often contain multi-tier dispute resolution clauses requiring parties to resort to mediation, conciliation, dispute boards or dispute adjudication boards before initiating arbitration.
The Federal Council recently confirmed that it was delaying full liberalisation of the Swiss electricity market. The Federal Electricity Supply Act provides that liberalisation should occur in two stages. The council has indicated that full liberalisation will now depend on the evolution of the energy pact with the European Union, progress achieved with Energy Strategy 2050, prevailing market conditions and the revision of the Federal Electricity Supply Act.
Pricing arrangements in long-term energy supply agreements usually combine a contract price formula – according to which the contract price will be recalculated periodically – with a price review clause. Based on this price review clause, the entire pricing arrangement can be adjusted to changing market conditions. The price review process regularly follows contractually pre-defined steps, from informal negotiations to formal dispute resolution.
The Swiss Federal Council recently launched a public consultation on the federal decree for full liberalisation of the electricity market. The decree is subject to an optional referendum. Full liberalisation of the electricity market is one of the conditions for a comprehensive long-term energy pact with the European Union.
Agreeing on a fixed gas price in a changing market environment is impractical and parties draft complex pricing arrangements to ensure that the contract price evolves with the value of the product sold. Such pricing arrangements consist of a price formula used to recalculate the price mechanistically for each billing period in combination with a price review clause to allow a revision of the price formula if required.
In the aftermath of the Japanese earthquake and the accidents that ensued at the Fukushima nuclear power plants, the Swiss Federal Department of Environment, Transport, Energy and Communications has suspended the authorisation process for the construction of new nuclear power plants in Switzerland. The suspension will be in effect "until safety standards have been carefully reviewed and if necessary adapted".