SPIEGEL: Mr. Bernotat, disgruntled customers, angry politicians and consumer protection groups are accusing the electric utilities of a massive rip-off. Does it still feel good to be the head of Germany's largest energy company?

Bernotat: Of course it does. However, I'm not unaffected by what's being written about us each day. I'd like to know why this is the case, why the media, the public and politicians clearly have it in for our industry.

SPIEGEL: We can't help you on that front. It's because there is no competition in the energy market and antitrust watchdog groups are constantly uncovering new evidence of abuse of market power.

Bernotat: That isn't exactly true. The Cartel Office (Germany's federal antitrust agency) is currently investigating a single case against one of our competitors. The investigation, which was launched in 2005, focuses on allegations that parts of CO2 certificates were priced incorrectly with a small group of customers.

SPIEGEL: You believe the accusation is incorrect?

Bernotat: It is totally unfounded and is the Cartel Office's desperate attempt to put together an abuse of power case. I am certain that the Office will not succeed. Nevertheless, people are acting as though we were already guilty. This is incorrect, and it is a malicious attempt to prejudge the case.

SPIEGEL: But criticism of the market power enjoyed by the four German energy companies is not just coming from the Cartel Office. Politicians and the EU Commission have also complained about the lack of competition.

Bernotat: That doesn't make the accusation more correct. You have to understand where we are coming from. We deregulated the energy markets in Germany in 1998. It was clear at the time that deregulation is a process, and it certainly has not yet been completed. But it is a fact that all German customers can now freely select their electricity and gas suppliers. And they should make use of this opportunity.

SPIEGEL: It is also a fact that countless customers are filing civil suits against their utilities because they feel taken advantage of. Doesn't this stand in sharp contrast to the notion of fair competition?

Bernotat: Once again, suspicion is no proof, and the fact that there are lawsuits doesn't mean that we are guilty. Besides, the situation has changed considerably since February 1. Before then, it was not possible to switch one's gas supplier. With our new brand "E wie Einfach" ("E for Easy"), customers throughout Germany now have an alternative to their local gas supplier.

SPIEGEL: Are you seriously claiming that there is more competition because the biggest provider has now entered the market with a second brand?

Bernotat: Yes. We already gained 18,000 new customers in the first few weeks. I am convinced that our competitors will soon come out with similar offers. What this means specifically is that if I don't like my local supplier's prices I can go to another supplier.

SPIEGEL: So far only five percent of customers have switched suppliers on the electricity market. This doesn't suggest well-functioning competition.

Bernotat: But perhaps there are also other reasons customers aren't switching -- because they can't be bothered, for example. I think it's completely wrong to assume that if there is little willingness to switch there is no competition. No one would think of accusing banks of not having enough competition merely because few customers are changing banks.

SPIEGEL: But financial institutions are not suspected of price collusion or manipulating prices on the market.

Bernotat: Nor is the energy industry.

SPIEGEL: The recently revealed trading data from Leipzig's EEX electricity exchange tell a different story.

Bernotat: Why?

SPIEGEL: Because they clearly show that RWE, one of Germany's largest electricity producers, bought up 28 percent of all electricity sold on the EEX last year. Isn't that price-rigging?

Bernotat: I can't comment on a competitor. But I still think that's nonsense. Electricity is now a completely normal product that is traded in markets. As an electric utility, we must constantly ask ourselves: Should I produce the electricity I need to supply to my customers or do I buy it in because it's cheaper on the market. This is a completely normal procedure…

SPIEGEL: …but no proof of clean prices.

Bernotat: No, but just take, for example, the fact that a large share of the EEX electricity is exported abroad. This happens because we here in Germany have long had the second-lowest wholesale prices in Europe. Do you truly believe that this would be the case if we were artificially driving up prices?

SPIEGEL: Even the industry has voiced the suspicion that suppliers are shutting off power plants to reduce supply and drive up prices. Do you deny that this is a possibility?

Bernotat: Yes. There are now service providers that can provide the data on power plant use throughout Europe. Every major electricity dealer has access to this data. It's all very transparent. Besides, the EU Commission has already investigated the exchange, and both the Federal Supervisory Agency for Financial Services and the economics ministry in the state of Saxony constantly monitor the market. There have never been any complaints.

SPIEGEL: But why would a producer like RWE buy up so much electricity on the exchange if it can produce it far more cheaply with its own power plants?

Bernotat: There are many possible reasons, but only RWE can answer that question. I am certain that the prices traded on the electricity exchange are above-board.

SPIEGEL: That's what E.on and the other utility companies consistently claimed about the network usage fees. But it took only one investigation for regulators to cut €2.8 billion from the industry's supposedly proper estimates. How can anyone believe the companies anymore?

Bernotat: Even if you don't believe us, I am very much in favor of reasonable regulation of the networks. However, by taking this step the regulatory agency hit a sore spot. Under this approach, we barely recoup our investments in the network sector -- that's all we can get out of it.

SPIEGEL: Then it shouldn't bother you much that the EU Commission is in favor of splitting up the energy companies and wants to see the networks sold.

Bernotat: So far no one has been able to explain to me how exactly this is supposed to promote competition in Europe. If you look at countries like Sweden and the Netherlands, which have already split up their utilities, the prices and competitive situation are not much different than they are here in Germany. I don't understand the point of such a measure.

SPIEGEL: The idea behind it is that young companies can only survive if they are no longer prevented from connecting their power plants or wind farms to the grid at sensible prices.

Bernotat: But that's already happening and is monitored by the regulatory agencies. Splitting up the major companies will do little for European competition. I think the EU Commission has now realized this, and that's why this plan is no longer being pursued.

SPIEGEL: What gives you that idea? Even Commission President José Manuel Barroso has made it clear several times in recent weeks that the Commission favors splitting up the companies. Do you think he's joking?

Bernotat: No, of course not. But I think that a significantly better proposal is now on the table. We are talking to the Commission about establishing stronger connections among the power grids within a large region, such as France, Germany, Benelux, Austria and Switzerland. This would generate intense competition between countries and individual electric utilities. The price of electricity in this region could be determined on an independent European exchange. That would truly help us in a common market.

SPIEGEL: But it would also work if the networks were first sold to an independent operator. Even Deutsche Bank called for this step in a study it released. Doesn't this make you think?

Bernotat: Spare me the commentary on this study. We are on the right track with the discussion about a core Europe for the electricity market. I am certain that we'll also be able to gain the EU Commission's support of such a model.

SPIEGEL: The EU approved comprehensive climate protection goals a few weeks ago. CO2 emissions are to be reduced by 20 or even 30 percent by 2020. What does this mean for the energy supply in Germany?

Bernotat: These are very ambitious goals, and I hope that politicians will find the courage in the coming months to explain to consumers what they'll have to pay for it.

SPIEGEL: Will electricity become more expensive?

Bernotat: Of course. We'll have to get used to substantial increases. You can't have all this for nothing. Take, for example, the goal of having 20 percent of the energy being fed into the power grid come from renewable sources. I support that completely. But it will only be realistic if we build giant wind farms far off Germany's coastlines. The power lines alone would cost billions, and nobody knows for sure today whether the technology will truly work the way we want it to.

SPIEGEL: Do you consider the goal unrealistic?

Bernotat: No, I believe we can make it. However, I would like to see more realism in the overall discussion. Even if 20 percent of our energy comes from renewable sources, we still have 80 percent to cover from other sources. And that's where we currently lack a sustainable concept.

SPIEGEL: What do you mean?

Bernotat: Nowadays we produce electricity from brown coal and hard coal, nuclear power and, to a small extent, natural gas. Now take a look at the political debate. Brown coal and hard coal power plants are castigated as polluters, which no one wants anymore. We want to get out of nuclear power. And natural gas is too expensive and makes us more dependent on Russia. But what do we want? To turn off the lights in Germany? This has to become a serious topic of discussion.