Bun­desnet­za­gen­tur launch­es con­sul­ta­tion on key el­e­ments for ad­just­ing de­pre­ci­a­tion ar­range­ments in the gas sec­tor

Year of issue 2024
Date of issue 2024.03.06

The Bundesnetzagentur has today published a key elements paper proposing an adjustment to the depreciation arrangements for assets in the gas sector. The key elements paper is part of determination proceedings that are also being opened today.

"Natural gas is going to play a less important role in many sectors. Parts of the gas network will be used to transport hydrogen. Other parts of the network will not be used as of 2045 at the latest and will be decommissioned," said Klaus Müller, President of the Bundesnetzagentur. "We expect user numbers to drop more quickly than costs. That would mean that the remaining users would have to pay higher and higher tariffs. We're now planning to enable network operators to spread their costs over time so that as many customers as possible can bear them. In this way, we will prevent customers who were unable to stop using natural gas faster from having too great a burden at the end. At the same time, we will make sure that network operators will be able to recoup their necessary investments in the natural gas networks."

Adjustment of depreciation arrangements

With the key elements paper published today, the Bundesnetzagentur is opening a dialogue about the depreciation arrangements for the natural gas networks. It is proposing various models to also shorten the useful lives of existing assets and to create additional flexibility in the depreciation methods. Network operators would then be able to choose useful lives so that their assets would be fully depreciated by the end of 2044 at the latest and thus could be refinanced via the network tariffs. The Bundesnetzagentur already made a rule to this effect for new assets and LNG connection lines in 2022. The Bundesnetzagentur is also starting a discussion about alternatives to the straight-line depreciation method, such as the declining balance method of depreciation, to ensure an appropriate allocation of costs.

The proposed models will guarantee flexibility and take account of the different states of planning in the transition in the heating sector. They also take into consideration the heterogeneity of the networks. Network operators that expect a faster end to the supply of gas in their supply area will be able to get out of the gas supply sector much more quickly.

However, faster depreciation is associated with an initial rise in tariffs, although the specific effects on the tariffs are strongly dependent on the regional implementation of the heating transition. The models put forward by the Bundesnetzagentur are expected to lead to a moderate rise in tariffs.

Background

The significance of natural gas will diminish in many sectors in the medium term. Although there is not yet a large decline in gas connections, it is already foreseeable that there will be major regional differences in the demand for and use of the gas networks.

A large part of the natural gas network will not be used beyond 2045 and will be decommissioned. Some federal states and municipalities are planning to phase out their gas supply before that. Parts of the transmission system and, in individual cases, the distribution system will be used to transport hydrogen. The remainder of the network will no longer be used and will be decommissioned.

The Bundesnetzagentur's forecast calculations show that it is essential to adjust the depreciation possibilities for existing assets. Otherwise, there would be several billion euros worth of unamortised residual value as at 31 December 2044. There would also likely be a significant rise in network tariffs at the expense of the remaining network customers.

Next steps

The Bundesnetzagentur is launching a consultation on the key elements. Comments may be submitted until 28 March 2024. The process is planned to be concluded in time for the rules to take effect in 2025.

The key elements have been published at www.bundesnetzagentur.de/gbk-aktuell.