Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

German regulator cuts power, gas grid earnings to protect consumers

EconomyOct 20, 2021 10:57AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
2/2 © Reuters. FILE PHOTO: A high-voltage power line tower near Berlin, November 7, 2006. REUTERS/Pawel Kopczynski/File Photo 2/2

FRANKFURT (Reuters) -Germany's federal network agency on Wednesday curbed the permitted return on new infrastructure for power and gas networks in the years to 2029 to protect consumers from higher energy bills.

The move, which the authority said was led by the general interest rate environment, comes as a surge in energy prices has left households facing an expensive winter heating season.

The grid element accounts for just over a fifth of the final bill paid by power consumers, while in gas it is a quarter, industry statistics show.

In its equity interest rates for the networks published on Wednesday, the authority proposed a permitted return for new infrastructure of 5.07%, versus 6.91% now, in the regulated sectors, where costs are recouped through fees levied on prices paid by energy customers.

The new rates will apply in the five-year periods starting 2023 and 2024 respectively. Rates for old infrastructure were set at 3.51%, down from 5.12%, the agency said in a statement.

The agency said it had been mindful of the need to allow satisfactory revenues for operators in a sector led by E.ON, and had taken on points raised by them in the consultation periods.

But there was also an obligation to lessen the impact on consumer prices, it said.

The agency assumed a risk-free interest rate average over 10 years of 0.74%, which it said it could adjust should there be unexpected changes. It granted a risk surcharge of 3%.

The final rates are above the first proposals made in July, when the authority had suggested 4.59% for new infrastructure and 3.03% for old.

Operators say they need plenty of money to upgrade gas networks for their future roles in decarbonised energy systems.

Billions of euros will also go into wind and solar power production plants in coming years, and this capacity needs hooking up to power grids.

EnBW, which operates power and gas grids mainly in Baden Wuerttemberg state, said the move would undermine the speed of renewable power expansion and the re-purposing of gas infrastructure at a time when they should be sped up.

The company may take legal action after studying the 53-page document more closely, board member Dirk Guesewell said.

Some analysts had supported the operators' views, while others have said big institutional investors would still be happy with a lower outcome as the German grids deliver steady income streams.

German regulator cuts power, gas grid earnings to protect consumers

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email