German court paves way for billions in savings on grid fees for consumers

Germany’s Federal Court of Justice (BGH) has decided that the Federal Network Agency (BNetzA) can cut the guaranteed rate of return on power and natural gas grids, a move that may save consumers and businesses billions in grid fees. The energy industry association BDEW called the ruling “incomprehensible.” The BGH overturned an earlier ruling by a regional court from March 2018, which had agreed with a complaint lodged by more than 1,100 grid operators, and ruled that the guaranteed rate of return for German grid operators had been “unlawfully undervalued” by the BNetzA, which wanted to achieve a decrease to the tune of two billion euros over five years.
In a statement, BDEW head Stefan Kapferer said Germany’s rates are among the lowest in Europe, although there is a greater need to update the grids. Lowering the rates sends “completely wrong signals in light of the importance of the energy grids for the challenges of the energy transition,” he said.
BNetzA president Jochen Homann told Tagesspiegel background that the ruling is “good news for power and gas consumers in Germany.”
NGO Environmental Action Germany (DUH) welcomed the ruling. It is difficult to explain to power customers that the interest rates for building energy grids is much higher than for private money, said managing director Sascha Müller-Kraenner. “With its decision, the BGH relieved the electricity customers altogether of approximately two billion euros in the next five years and thus strengthened consumer protection.”

Power and gas grids are natural monopolies and are thus regulated by the state. This includes the decision by BNetzA on the interest rates on capital invested or to be invested in grid infrastructure, which it does for five-year intervals. Grid costs are paid for by consumers. The electricity grid fees account for roughly a quarter of the power bills of German households.