German regulator starts process for new power grid regulation (updated)

Elia SA

05/03/2025 15:24

Regulator to revise high-voltage power grid funding

Industry can now respond to initial proposals, regulator says

Clarity needed to support companies' spending plans

Adding context in paragraphs 2-6, details from the planning paper and link to recent Amprion interview in paragraphs 7-10

By Vera Eckert

FRANKFURT, March 5 (Reuters) - Germany's energy watchdog Bundesnetzagentur is proposing introducing annual, cost-based rules for power grid operators under a regulatory revamp for the sector, it said on Wednesday.

The country's power grid operators, including Amprion RWEG.DE, are hoping for improved funding conditions under the revamp to enable them to decide future spending plans as the regulator updates its framework of permitted returns on infrastructure spending this year.

The regulator, which is supervised by the economy ministry, decides levels of permitted returns on infrastructure spending by the power grids in a fee-sharing system that relies mainly on consumers to back infrastructure spending via fees on power bills.

It said in a statement on Wednesday it had started the process to decide on the regulatory framework, which could among other aims, replace the so-called incentive regulation. Industry has until April 18, 2025 to respond to the proposals within consultation proceedings.

The regulator's consumer protection orientation has been criticised by the power grid operators who say their spending plans were constrained by the cap on their returns given they must invest 450 billion euros ($481 billion) by 2045 to bump up and digitise grids to mainly transport renewable power.

Spending by hundreds of power distribution grids in coming decades, most notably market leader and European grid giant E.ON EONGn.DE, is also impacted by what costs are recognised under the regulation.

Amprion, 25%-owned by RWE, said in a recent interview with Reuters that German power grid operators' current earnings levels could not keep up with international competition due to the cap on their returns on infrastructure spending.

A simpler and more transparent system should allow for quicker flows of money to refinance the firms, the regulator said in a 15-page proposal paper referred to in the statement.

($1 = 0.9350 euros)

 (Reporting by Vera Eckert, editing by Miranda Murray and Emelia Sithole-Matarise)

 ((vera.eckert@thomsonreuters.com; +49 30 2201 33654;))