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September 29 (Renewables Now) - German electric utility EnBW Energie Baden-Wuerttemberg AG (ETR:EBK) has called on the Federal Network Agency to keep the rate of return on capital for electricity and gas grids at a competitive level as the regulator is planning a serious cut.
The grid yield for new plants must be at least 1.6 percentage points higher than the 4.59% planned by the Bundesnetzagentur if the market price premium is correctly calculated based on economic conditions, EnBW executive Dirk Guesewell said on Monday.
The regulator is planning to reduce the return to 4.59% from 6.91% currently for the electricity network in the period 2024-2028 and for the gas grid in 2023-2027. The cut, expected to be announced within days, has fueled a debate in Germany.
According to a study conducted on behalf of the Association of Energy Market Innovators and renewable electricity provider Lichtblick, the return could be cut to 3.79% without impeding investments in grid renovation and expansion. The result of high return rates is only higher profits for the monopoly companies, while customers end up paying the bill, according to the association's head Robert Busch.
Guesewell, who is in charge of EnBW's power grids, however, claims that a lower level of return would make the restructuring of the energy system, sector coupling and the achievement of climate goals impossible.
In August, the Advisory Council of the Bundesnetzgentur called on the network regulator to keep the return on equity at an investment-friendly level as the expansion of electricity and gas grids will require significant investments for the successful energy transition.
The Council did not make a specific recommendation but warned that the planned reduction to 4.59% would worsen the framework investment conditions.