Solutions Watch: Meet Mr. Poduschka, an Austrian Lawyer mulling a Class-Action Suit to Force Utility Providers to Disclose how they 'calculate' Electricity Prices

It's reasonable and realistic, if only because politicians will throw energy companies under the bus before losing 'their' sinecures'

I don’t want to bring bad news all the time, so this post is (hopefully) quite different.

You all know about the sky-high utility prices and the like, its proximate causes and origins, as well as the foreseeable—and preventable—consequences. For references, see my two dedicated postings from earlier this week (here and here).

So, this is going to be a bit different, as I said. First, I’ll try my hand at explaining why we all suffer such sky-high utility prices—and secondly, I shall show you what may be done about it.

Why are Utility Bills so High?

In short: it’s the Climate Policies™, Stupid, or: the ‘Greta Tax’.

The somewhat longer version goes a bit like this: everyone knows that, at some point in time, humanity will ‘run out of’ fossil fuels. I’m using scare quotes deliberately, because well before there will be actual physical constraints on supply, we won’t be able to afford to ‘produce’ fossil fuels anyways. In short: we’ll eventually have to leave fossil fuels ‘behind’, or ‘in the ground’ no matter what we want or do.

This has a number of gigantic implications, least of all in terms of primary energy inputs, which derive from fossil fuels to the tune of some 83% globally. Thus, if human societies wish to ‘do something’ about CO2 emissions, it means, mainly, to reduce consumption of fossil fuels. Doing so, however, and inevitably so, will induce a host of problems as economic growth is closely correlated with energy production (consumption).

It’s a conundrum, if there ever was one.

A few decades ago, leading pro-business and/or big business-funded circles, such as the Club of Rome or the World Wildlife Foundation, issued ever-increasing warnings about the need to ‘curb CO2 emissions’ to stave off ‘climate change’ and the like.

Their main sales pitch: ‘renewable energy’, which is, mainly, a pipe dream combined with loads of hyperbole—and gaslighting (no pun intended).

Hydroelectric generation, wind turbines, and solar energy are typically mentioned, and while some of them are more useful than others (esp. hydroelectric), the cost of any unit of electricity produced varies from location to location, especially if compared with ‘traditional’ energy production from (via) fossil fuels. Yet, the bottom line is this: ‘renewable’ energy is typically more expensive than energy deriving from the burning of fossil fuels, mainly coal, oil, and natural gas.

So far, so good—and here’s how these basics interact with your utility bills.

While none of the pro-business and/or big business-funded circles had much real-world impact before James Hansen, Ph.D., went before a (carefully staged) U.S. Senate Committee in 1988 to paint a drastic picture of future calamity via runaway human-induced climate change, the notion that there is an increasingly drastic need to change industrial civilisation became deeply engrained, and widely diffused in the past thirty-odd years.

Yet, the practical impact of these warnings remained quite limited so far, if one wishes to discount the increasing amounts of hot air produced by politicians’ pledges and the ludicrously large quantities of excess CO2 emissions caused by the various world climate summits.

That is, until, in March 2011, a tsunami hit the nuclear power station in Fukushima, Japan, which induced—as in: provided the cover—for especially EUropean countries to finally shift from talking the talk to attempting to walking the walk on significant reductions of carbon emissions.

With Germany taking the lead, Ms. Merkel announced the Energy Transition, or Energiewende (official site here, further particulars here, Ministry of Truth™ entry here), which envisioned to decommission, over the course of any number of years, all ‘traditional’ energy production, by which is meant: electricity generation, i.e., coal and gas-fired plants, as well as nuclear power stations.

Over the past decade or so, many EU member-states followed Germany’s lead, which led to the entirely predictable problem of making up the difference in power generation.

Now, if you’re an enquiring mind, you remember that ‘renewables’ are more expensive than ‘conventional’ energy, which goes a long way towards explaining rising utility bills over time. In addition to being quite a bit more complex, too (as in: more structural and organizational differentiation), compared to fossil fuel generation—think: a gas or diesel-fuelled car vs. a hybrid one: the former has one engine, the latter two, in addition to batteries and more wiring—there is also the problem of what is called intermittency, i.e., the sun doesn’t shine at night, water flows are irregular (if there are no dams, which, of course, call the Greta fans to arms), and the wind doesn’t always blow. Intermittency means that our electrical grids, which were designed with ‘conventional’ round-the-clock electricity generation in mind, are, by and large, incapable of withstanding such large ‘wobbles’. Hence, the grid needs to be updated as well as transformer stations and virtually everything else—before we even get to the point of energy storage. Bottom line: ‘renewables’ are much more expensive to begin with.

Yet, if the political desire to make the energy transition happen is there, it means that ‘incentives’ (subsidies) are there, too, in addition to a gigantic marketplace of ideas to fix the many technological and practical problems deriving from it.

And now we’re getting to the heart of the matter, which follows the principal logic of Western-style politics since WW2: if there’s a problem, throw money at it and hope the problem goes away.

Problem is, though, that physics and politics don’t mix very well.

Since esp. 2011, EUropean governments have been literally throwing good money after bad investments past, present, and future.

Most countries have moved to decommission early their nuclear power stations, triggering hauls of outrage from their owners due to the insanely high building, maintenance, and operating costs (to say nothing about what to do with spent fuel rods). Government’s solution? Compensate the energy companies for lost future earnings, which, of course, was paid for with your tax money.

The same shenanigans were done with coal and gas-fired plants: the owners howled ‘foul, we’re losing future earnings’, the governments spent tax money on big business—all the while consumer prices rose and rose and rose.

Do you feel fleeced yet?

If not too much, here’s the other trick governments all over the EU/EEA are using: remember, ‘renewables’ are more expensive to begin with, but their inclusion in the electricity mix is mandated (much like biofuel additives to gasoline and diesel), which affords energy providers with yet another opportunity to rob the consumer: due to policy decisions, your utility bill doesn’t accurately reflect the true cost of your energy consumption.

Instead, the utility bill consists of: cost of energy + taxes + ‘whatever’ the electricity provider is able to charge, citing ‘transition’ reasons.

And this is why, finally, we get to the breaking point: while both the cost of production per unit of energy produced is one thing that is easily explainable, with taxes slapped on top of it another, there are no good answers provided by anyone for the ‘whatever’ category.

You see, the ‘whatever’ means: consumers are charged at the top marginal rate per unit of energy produced at any given time (which is, in my opinion, why there are mandated ‘smart meters’ now), irrespective of either the true cost of energy and/or taxes.

Ostensibly, this is done to defray the much-higher costs deriving from the transition to ‘renewables’, and while there is certainly some merit to this notion—after all, new power lines, better transformers, and the like need capital investment—the recent price hikes have nothing to do with it.

In short: it’s a racket, run by big energy companies in cahoots with governments and the EU, with you and me being robbed as the primary driver of it all.

There are no explanations whatsoever given by anyone—not the government, nor the regulatory agencies, nor by the energy companies—for both the fraction the ‘whatever’ category constitutes and how it is ‘calculated’.

And at this point, we’re finally ready to move to the second part.

Sue the Energy Companies

On 16 July 2022, Austro-Covidian state broadcaster ORF Vienna ran a brief piece entitled ‘Electricity Bills: Lawyer Mulls Class-Action Suit’, which I shall present to you for two main reasons: while my trust in government institutions, such as the Department of Justice (sic) is as low as my expectations, I’m bringing this to you because I think the lawyer in question, one Michael Poduschka (see his law firm’s website here), is a well-known quantity in the field—and I think that his mulled avenue is actually promising.

From the ORF piece (emphases mine):

At the moment, many people are receiving notifications from their respective energy providers with huge electricity price increases. A woman from Linz, who is now being asked to pay 163% more than before, did not want to take this lying down and is suing Verbund [the publicly-owned provider] in this case. She was the first, but not the only one to contact lawyer Michael Poduschka. Since then, he says, he was contacted by hundreds more.

‘People are afraid and angry’

It is a mixture of fear and anger with which people are currently coming to him, says Poduschka in an interview with ORF Vienna’s Patrick Budgen: ‘They are angry about why they suddenly have to pay so much all the while energy companies are making huge profits. And they are also afraid. It is not guaranteed that electricity prices will remain at even that level, which is already extremely high for them, but that utility prices would rise even further.’

And here is why I think this is actually a realistic course of action, as Mr. Poduschka is mulling to force the EU, governments, and regulators to explain, by way of discovery in a public court of law, how the sausage (energy prices) are actually determined:

Above all, the lawyer questions the calculation of the electricity price. The companies argue with the merit order principle. This stipulates that the most expensive power plant on the market determines the electricity price on the exchange. At present, these are gas-fired power plants, yet this pricing mechanism also applies even if the customer’s electricity supply contract may only include a small amount [or none] of gas-fired electricity. Poduschka: ‘This means that they relied on getting electricity purely from hydropower and are now completely surprised why they have to pay so much for the electricity as if it had been produced with fossil fuels.’

Don’t forget: this is a feature of the rigged system (see above), not a bug. Yes, the current predicament with the sky-high gas prices is an additional windfall-generating development, but the main issue is: you as consumer have a contract that says ‘renewable energy mix’, but you’re charged at made-up rates.

This isn’t fair, and it’s also something that reeks of fraud.

Hence, I think Mr. Poduschka’s course of action is both doable as well as realistic to obtain, in due course, redress of grievance because this is, at heart, a regulatory issue that also affects the judge and, if it should come to a grand jury-style investigation, also the lay jurors. And you can easily see how they will most likely act.

Here’s the rest of the ORF piece:

Several lawsuits are already in preparation. Poduschka expects the first hearings at the District Court for Commercial Matters in Vienna as early as this autumn. He thinks the odds of success are very high, even though the electricity contracts of the individual customers often differ from provider to provider. ‘But the basic principle that you can only charge the true cost of electricity is, I think, obvious to everyone. And anything else would be non-transparent in my view.’

Among the hundreds of enquiries he and his team received, there are also some who do not have legal protection insurance. He is currently collecting them all. ‘We are planning to file a class action suit for them. Of course, you have to differentiate between electricity providers.’ He wants to decide on the next steps in late autumn. ‘Yet, if as many customers continue to come forward as they have so far, I believe that this is a viable option’, says Poduschka.

Bottom Lines

In recent months I often spoke of the follies of the EU Commissions ‘liberalisation’ of energy ‘markets’ in the single economic area, so, you better watch this space for updates on these matters as a precedent set by a court in one part of the EU/EEA is certain to have potential consequences for the entire bloc.

Yes, if Mr. Poduschka and his team should be successful to win in court, or, via bargaining deals, effect a policy change, this will be fought tooth and nail (and then some) by the energy companies and their brown-nosing camp followers in government and legacy media.

Still, this is well worth your attention, I think, for the abject lack of transparency and seemingly arbitrary nature of energy prices in the EEA needs correction.

You see, so far energy companies could hide behind the (mainly made-up) claim that they don’t know enough about consumption patterns to charge the ‘true’ costs of electricity. With the widespread adoption, via mandates, of so-called ‘smart meters’, however, utility companies know so much about our habits and consumption patterns that legal action to charge consumers based on their individual consumption becomes both a technological possibility as well as a political necessity: no politician wishes to be perceived as fleecing consumers over this matter, hence I think it’s likely that, even if Mr. Poduschka would settle out of court, that politicians, being the craven creatures that they are, will throw energy companies under the bus before themselves.

Let’s keep pushing, then, people.

If you know a lawyer who would file such class-action suits, or if you’re in the EEA and already engaged in one, do reach out to Michael Poduschka and his team who have ample experience in exposing the shenanigans of corporations, including, but not limited to, the lies told about the range of electric vehicles, energy prices, Covid injection-related adverse events, and much more.

Again: see Mr. Poduschka’s website here and get in touch with him and his team via the dark blue ‘Kontakt aufnehmen’ (get in touch) button in the top right corner.

The website is in German ‘only’, but I’m reasonably sure they will respond to English enquiries.