PREUSSENELEKTRA AKTIENGESELLSCHAFT History

Company History:

PreussenElektra Aktiengesellschaft (PreussenElektra) is Germany's second largest electricity utility behind RWE. In 1990, PreussenElektra delivered 53.6 billion kilowatt hours (kWh) of electricity to 15 million customers in an area extending from the Danish border to Frankfurt am Main and incorporating Schleswig-Holstein, Lower Saxony, and parts of NorthrhineWestphalia and Hesse. PreussenElektra also trades electricity with utilities in Denmark, France, the Netherlands, and, more recently, in Switzerland. Following the unification of Germany in 1990, PreussenElektra, along with RWE and Bayernwerk, became a partner in the modernization of the electricity supply industry of east Germany.

PreussenElektra is a key member of the VEBA group. In 1929 the Prussian state founded the Vereinigte Elektrizit&auml×und Bergwerks Aktiengesellschaft, today known as VEBA A.G., to act as a holding company for its industrial shareholdings which included PreussenElektra. VEBA remained wholly in the hands of the Prussian state until 1965 when it was partially privatized. In 1987 the state's remaining 25.5% stake in the VEBA group and its member companies was sold. VEBA retained its role as a holding company and has interests in four sectors: electricity, oil, chemical, and transport and related services.

PreussenElektra itself was founded two years before VEBA. In 1927 three electricity suppliers, Grosskraftwerk Hannover AG, Preussische Kraftwerke Oberweser AG, and the Gewerkschaft Grosskraftwerk Main-Weser, joined together to form the Preussische Elektrizit&auml×-Aktiengesellschaft (PreussenElektra). The new company had its headquarters in Berlin and operated two thermal power stations, Borken in Hesse and Ahlem in Hanover, and eight hydroelectric stations--Hemfurth I and II, Krotzenburg, Kesselstadt, Mainkur, Werrawerk, Helminghausen, and Dörverden.

PreussenElektra was established on the basis of a law governing the participation of the state in electricity companies. According to this law, the newly formed company was to oversee the electricity interests of the Prussian state which, in addition to its state in the founding companies of PreussenElektra, included the Nordwestdeutsche Kraftwerke AG (NWK). NWK was founded by Siemens and Halske at the turn of the century, under the name Siemens Elektrische Betriebe, in order to create markets both at home and abroad for electrical equipment manufactured by Siemens. In 1925 the Prussian state acquired the majority shareholding and the company became known as the Nordwestdeutsche Kraftwerke Aktiengesellschaft. Until their formal merger in 1985, PreussenElektra and NWK cooperated very closely in all aspects of electricity supply.

At the time of the foundation of PreussenElektra, the Prussian state participation in the electricity sector also extended to Ostpreussenwerke AG and the Überlandwerke and Strassenbahnen Hannover AG. The addition of the electricity assets of the Prussian state to its portfolio gave PreussenElektra extensive influence over the power stations of Herrenwyk, HarburgWilhelmsburg, Farge, and Wiesmoor.

From 1928 to 1931, through a series of joint ventures and acquisitions, PreussenElektra laid the foundations of its current production and supply network. In common with other major German electricity utilities, PreussenElektra worked closely with local municipal authorities and during this period founded several regional electricity supply undertakings in partnership with these authorities. These new ventures included the Schleswig-Holsteinische Stromversorgungs-AG, today known as the SCHLESWAG AG Rendsburg; the Stromsversorgungs-AG Oldenburg-Friedland, now known as the Energieversorgung Weser-Ems AG/EWE, Oldenburg; the Elektrizit&auml×-Aktiengesellschaft Mitteldeutschland (EAM), Kassel; and the Hannover-Braunschweigische Stromversorgungs-AG (HASTRA).

During the same period, PreussenElektra also took stakes in the Braunschweigische Kohlen-Bergwerke AG (Helmstedt), the Westpreussische Überlandwerke Marienwerder GmbH (Marienwerder), and Thüringer Gasgesellschaft, originally based in Leipzig but which moved its headquarters to Munich. In 1929 NWK took over the power station at Oldenburg, and in 1932 the pump storage station Waldeck 1 was commissioned.

The result of this extensive activity and expansion was that by 1937 the annual electricity output of PreussenElektra exceeded one billion kWh. From the point of view of acquisitions, the following decades were much quieter but expansion continued through organic growth--that is, through the development of existing facilities and the construction of new ones.

World War II caused severe disruption to the German electricity industry which was a strategic target for Allied bombers. The construction of the hard coal station Lahde, for example, which began in 1941, was interrupted several times by the war and was finally stopped by it. It was not until 1951 that the Lahde power station--renamed Heyden in 1953-entered the PreussenElektra supply network. This station was still in operation at the beginning of the 1990s with an installed capacity of 740MW.

The war did not inhibit all construction work. In 1942-1943, the first expansion of NWK's Lübeck Siems works was completed--a further 50MW expansion took place in 1950-1951--and PreussenElektra's first 110 kilovolt (kV) line went into operation, connecting Lübeck, Lüneberg, Harburg, and Farge.

After the war, electricity production and distribution in the part of PreussenElektra's supply area that was located in the new state of East Germany came under state control and the headquarters of PreussenElektra were moved from Berlin to Hanover in 1947.

The next decade was primarily one of unspectacular but steady expansion. In 1947 NWK leased the power station Süd from the former naval dockyard in Wilhelmshaven. The expansion of the power station at Farge by a further 70MW was begun in the winter of 1948-1949 and completed in 1950-1951. In 1953 the brown coal power station Hessen-Frankfurt A.G. was integrated into the PreussenElektra network and renamed Wölfersheim. In 1954 NWK set up its central command offices in Harburg. At NWK's hard coal power station Lübeck-Herrenwyk a new 25MW unit produced its first electricity in 1955. In the same year, the first 70MW unit at Emden came into operation and the Kraftwerk Kassel GmbH was founded: PreussenElektra had a 60% stake in the new venture and the Stätische Werke AG Kassel owned the remaining 40%. In 1956 the hydroelectric power stations Schlusselburg and Drakenburg (Mittelweser) were commissioned.

In retrospect, 1957 was an important year for PreussenElektra. Together with other electricity utilities, PreussenElektra and NWK founded the Studiengesellschaft für Kernkrafte GmbH, a research company dedicated to the study of the utilization of nuclear power in electricity production. By 1990 nuclear power was to account for over 60% of PreussenElektra's electricity production, the largest nuclear share of any of the major German electricity utilities.

It was some years before PreussenElektra's first nuclear power station came into operation, however, and in the interim PreussenElektra continued to build up its conventional generating capacity. The hydroelectric power station at Langwedel an der Weser was commissioned in 1958. In 1959-1960, the first 125MW unit of the power station Stade went into operation and the construction of the power station at Schilling, the first big oil-fired station in West Germany, began. In 1960 the hydroelectric power station Landesbergen began operation and in 1962 PreussenElektra acquired a stake in the Paderborner Elektrizit&auml×werk und Strassenbahn AG.

It was during the early 1960s that NWK began its cooperation with electric utilities from neighboring countries. In 1961-1962 NWK collaborated with the Danish utility Det Jyskfynske Elsamarbedje (ELSAM) in the completion of the 220kV link from Flensburg to Apenrade: a further link between the power station at Schilling and Audorf was also under construction. Shortly afterwards, Danish electricity suppliers Vattenfall and ELSAM and NWK agreed to link Sweden, Denmark (Jutland and Funen), and northwest Germany through the building of a direct connection, known as Konti-Scan, from Gothenburg to Aalborg. This link, which was to be jointly managed, went into operation in 1964.

The Danish connection grew stronger over the coming years. In 1974 NWK decided to build a 600MW power station in cooperation with ELSAM and Snderjyllands Hjspaendingsvaerk An/S in Apenrade, Denmark. In order to smooth supply peaks and troughs, PreussenElektra engages in supply exchanges with utilities in Denmark, the Netherlands, and France, and from 1990 with Switzerland.

Domestic production was not neglected during the forging of these overseas links. In 1963 PreussenElektra took over the management of the power station Robert Frank at Landesbergen (Mittelweser), Germany's first large power station based on natural gas. In 1965 the 52MW gas turbine at Emden was completed and the 620MW Staudinger power station was commissioned. A 25MW gas turbine was commissioned at Wiesmoor in 1968. In 1966 PreussenElektra acquired the majority shareholding in the Paderborner Elektrizit&auml×werk und Strassenbahn A.G., which is today known as PESAG A.G.

The fiscal year 1967-1968 marked the beginning of a major phase of nuclear power station construction as work commenced on PreussenElektra's station at Würgassen and the Stade plant, which was two-thirds owned by NWK and one-third owned by HEW. These plants, the first nuclear plants in West Germany to be operated on a purely commercial basis, began to deliver electricity in 1971-1972. In 1969 NWK and HEW founded Kernkrafts Brunsbüttel GmbH, with stakes of one-third and two-thirds respectively, for the later joint construction of a nuclear power plant at Brunsbüttel.

PreussenElektra's investment decisions in the early 1970s were greatly influenced by the oil crisis of 1973 and the fears of the industrialized world about possible future energy shortages. In 1971 PreussenElektra decided to build a nuclear power station at Unterweser which was completed in 1976. In 1973 PreussenElektra and Interargem, a consortium composed of Stadtwerke Bielefeld GmbH, the Elektrizit&auml×werke Wesertal GmbH, and the Elektrizit&auml×werk Minden-Ravensberg GmbH, decided to build a nuclear power station at Grohnde. This power station produced its first commercial power in 1985, a year before the start-up of NWK's nuclear power plant at Brokdorf, which took ten years to build.

By 1990 PreussenElektra had the largest nuclear generating capacity in Germany, slightly ahead of its much bigger rival RWE. Altogether the company had a stake in 7182MW of nuclear power plant, of which 4898MW was wholly owned by the company.

A major lesson of the oil crisis was that over-reliance on one form of energy was to be avoided. PreussenElektra heeded this message and continued to bolster its existing conventional supply network. In 1970 the 380kV line from Landesbergen to Dollem Bei Stade came into operation and the hard coal station at Kiel began its deliveries to NWK's 220kV network. In 1970-1971 NWK began to operate the 88MW gas turbine power station at Itzehoe. Shortly afterwards NWK's 450MW natural gas-fired unit at Emden was opened.

In 1972-1973 construction work began on the 705MW hard coal/oil power station at Wilhelmshaven which started production in 1976. In 1973 88MW and 57MW gas turbines commenced operations at Audorf and Wilhelmshaven respectively. NWK started construction of the 290MW gas turbine unit at Huntorf in 1975. In the following year the pump storage station Waldeck II was commissioned, 42 years after Waldeck I. The coal-fired 642MW Mehrum power station, in which PreussenElektra and Hannover-Braunschweig GmbH had equal shares, was completed in 1979.

West Germany was one of the first European countries in which environmental concerns became a serious issue. Such concerns will continue during the 1990s and will affect investment costs and patterns. PreussenElektra was quick to tackle the environmental problems caused by its plants. As early as 1977, PreussenElektra had arranged for the partial removal of sulfur, one of the main causes of acid rain, from the chimney gases of the hard coal power station at Wilhelmshaven. Complete desulfurization was completed by 1986. Desulfurization was also completed at the Mehrum power station by 1986, and work continues on other plants.

Concern for the environment and energy conservation also manifests itself in a number of district heating projects and in combined heat and power plants. In 1983, for example, NWK's plant at Glückstadt began production and simultaneously delivered processed steam to a nearby industrial undertaking. Shortly afterwards, PreussenElektra embarked upon a number of schemes with Volkswagen which involved the delivery of heat as well as electricity to the Volkswagen works at Wolfsburg.

After decades of close cooperation, PreussenElektra and NWK finally merged into a single company in 1985. The merged company was subsequently fully integrated into VEBA, which was fully privatized in 1987. In 1986, the first full year of the enlarged company's operation, the 740MW hard coal station Heyden IV at Petershagen-an-der-Weser was completed and the hydroelectric units at Kesselstadt-am-Main began operations.

Three factors will preoccupy PreussenElektra during the 1990s. The first, the environment, has already been incorporated into the planning process. However, the prolonged closures of two nuclear power stations in 1990 to bring them into line with more stringent federal requirements could be a harbinger of stronger regulations to follow.

The second is the creation of the single European market. Given its central location in Europe, PreussenElektra is well placed to take advantage of greater integration of the European electricity network. The gathering support for the idea of a European energy charter, which covers not only the countries of the European Community but also those of EFTA and Central and Eastern Europe, including Russia, will only benefit PreussenElektra.

The third and major challenge for PreussenElektra in the 1990s, however, will come from its involvement in the modernization of the electricity industry of the new post-unification German states, especially as PreussenElektra's traditional supply area is conveniently adjacent to east Germany.

PreussenElektra had already agreed in 1987 to construct a 380kV line from Helmstedt to Berlin via Magdeburg, the initial stages of which were completed and operating by late 1989. The 1987 acquisition by PreussenElektra of VIAG's stake in the Braunschweigischen Kohlen Bergwerke (BKB) was an important element of this plan as BKB's plant at Offleben was designated to supply power to this line. PreussenElektra will also be instrumental in the Krümmel-LübeckGörries link between Schleswig-Holstein and Mecklenburg-Vorpommerania and the Mecklar-Vieselbach link between Hesse and Thuringia, both of which are to be built during the early 1990s.

Plans for reconstruction of the East German electricity network were set out in the German Electricity Agreement of August 22, 1990. According to this agreement PreussenElektra, Bayernwerk, and RWE hold joint responsibility for overhauling the antiquated, inefficient, and environmentally harmful electricity supply industry in east Germany. PreussenElektra and RWE hold 35% and Bayernwerk 30% of the agent company, which is responsible for Vereinigte Kraftwerks A.G. Peitz (lignite-power stations) and Verbundnetz Elektroenergie A.G., the high tension network.

At the beginning of 1991 these two companies were merged to form the company VEAG Vereinigte Energiewerke A.G. Once the initial assessment of the modernization needs of the East German network is completed, PreussenElektra, RWE, and Bayernwerk will together hold 75% of the shares in company with the remaining shares going to other German utilities and to Electricité de France (EDF), provided there is scope for equivalent investment by the German company in EDF.

On a regional level, the 15 former energy Kombinate of the DDR have been converted into distribution companies: 51 % of the shares will be open to West German companies and the municipal and regional authorities will be eligible for a maximum of 49%. PreussenElektra plans to become involved in Rostock, Neubrandenburg, Magdeburg, Potsdam, and Frankfurt/Oder, in which RWE will also have a 5% stake. PreussenElektra also plans a 17% holding in the region of Erfurt where Bayernwerk will be the major shareholder.

Principal Subsidiaries: Braunschweigische Kohlen-Bergwerke (99.9%); Energiewerke Frankfurt/Oder AG (90%); Energiewerke Magdeburg AG; Energiewerke Neubrandenburg AG; Energiewerke Potsdam AG; Energiewerke Rostock AG; Fränkische Licht- und Kraftversorgung AG (96.7%); Gasbetriebe GmbH; Gasversorgung für den Landkreis Helmstedt GmbH; Hannover-Braunschweigische Stromversorgung AG (57.5%); HKWG Heizkraftwerk Glückstadt GmbH (70%); Interkohle Beteiligungsgesellschaft mbH (75%); Kernkraftwerk Brokdorf GmbH (80%); Kernkraftwerk Stade GmbH (66.7%)) ; Kernkraftwerk Unterweser GmbH; Kraftwerk Kassel GmbH (60%); Landesgasversorgung Niedersachsen AG (52.8%); Norddeutsche Gesellschaft zur Beratung und Durchführung von Entsorgungsaufgaben bei Kernkraftwerken mbH (88.3%); PESAG Aktiengesellschaft (54.7%); PreussenElektra Telekom GmbH; PreussenElektra Windkraft Niedersachsen GmbH; PreussenElektra Windkraft Schleswig-Holstein GmbH; SCHLESWAG Aktiengesellschaft (58.3%); SCHLESWAG Entsorgung GmbH; Thüga AG (52.8%); ThügaKonsortium Beteiligungs-GmbH (75.7%); Überlandwerk Schäftersheim GmbH (75%); Überland-Zentrale Helmstedt AG.

Further Reading:

• Kitchen, Martin, The Political Economy of Germany 1815-1914, London, Croom Helm, 1978.
• Hardach, Kevin, The Political Economy of Germany in the Twentieth Century, Berkeley, University of California Press, [n.d.].
• Fischer, Wolfram, Germany in the World Economy during the Nineteenth Century, German Historical Institute, Annual Lecture, 1983.
• Berghahn, V.R., Modern Germany--Society, Economy and Politics in the Twentieth Century, Cambridge, Cambridge University Press, 1987.

Source: International Directory of Company Histories, Vol. 5. St. James Press, 1992.

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