MAY 2007

Börnsen, a village in northern Germany, is spoiling energy giant "E.on's" business by creating its own electricity and natural gas supply. The idea could catch on elsewhere.

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."

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.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.

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.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."

Reuland 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.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." 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.But 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.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.

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