Cur­rent sta­tus of the fu­ture reg­u­la­to­ry sys­tem for electricity dis­tri­bu­tion sys­tem op­er­a­tors and gas dis­tri­bu­tion and trans­mis­sion sys­tem op­er­a­tors

Year of issue 2025
Date of issue 2025.01.16

The Bundesnetzagentur has today published a range of documents presenting the current status of the development of the future regulatory framework for electricity distribution system operators and gas distribution and transmission system operators.


"Network operators are making considerable efforts and investments to meet the challenges of the energy transition. We want to provide even more support to them in this endeavour. We want regulation to become faster and simpler. We are creating attractive and stable framework conditions for network operators’ investments. At the same time we are providing incentives to ensure that every euro invested gives the maximum benefit to network users. We are strengthening the benchmarking process and creating incentives to promote energy transition competence. The documents published today give the network operators guidance as to the design of the overall concept following an intense year of discussions," said Klaus Müller, President of the Bundesnetzagentur. "Network expansion and network tariffs are important factors for location. In view of this significance, we need more transparency in the system. Our package ensures that increases in network costs do not go beyond what is absolutely necessary."

The Bundesnetzagentur is publishing drafts of the future determinations’ detailed rules for incentive regulation and cost determination that will replace the provisions in current ordinances, together with the key considerations and reasoning behind these rules. It is also publishing an expert report and a related paper presenting the Bundesnetzagentur’s position on the procedure for the methodology for determining cost of capital rates as well as a paper presenting the current status of the Bundesnetzagentur’s deliberations relating to the procedure for benchmarking methodologies.

This does not mark the end of the decision-making and deliberation process. Draft determinations on these procedures are expected to be published for consultation in the second quarter of 2025.

RAMEN determination proceedings

The framework determination establishes the main pillars of the future regulatory system for determining permissible costs. Various methodology determinations building on this will specify the details of the individual elements of the methodology.

What is new is that the regulatory period will be three years, following a transitional period of the usual five years. An adjustment of the operating costs using a separate instrument is planned during the five-year transitional period.

There will be a simplified procedure for smaller network operators, as under the current regulatory framework. A separate procedure is also planned for very small network operators that have costs up to €500,000.

The present adjustment of capital expenditure will be retained. However, the capex deduction for the gas sector will be redefined each year on account of the special arrangements in the KANU 2.0 determination.

The list of permanently non-controllable costs will be shorter compared to the current list.

It is planned to have a general sectoral productivity factor and benchmarking, as at present. Redispatch costs will be included in the benchmarking process to create incentives for the efficient use of redispatching.

Quality regulation will continue to be used to provide incentives to maintain the quality of supply, as under the current system. A new element will be energy transition competence.

Determinations proceedings for the base levels for electricity and gas

There will be changes to the capital maintenance concept for the base level. Only general price level accounting will be applied. In addition, standardised approaches to determining capital costs (WACC) and determining the current assets eligible for recognition will be introduced.
According to the current draft, trade tax will continue to be imputed.

The Bundesnetzagentur is publishing the status of expert discussions on other relevant components of the future system in addition to these drafts.

Return on capital/benchmarking

An expert report commissioned by the Bundesnetzagentur as well as a paper presenting the Bundesnetzagentur’s position are being published in preparation for a future dialogue on capital return.

The Bundesnetzagentur is also publishing a paper summarising current views on key issues to do with benchmarking. There is still a need for in-depth expert discussions in particular on the heterogeneity of the network operators and on adequate consideration for forward-looking network expansion.

Outlook

The publications present the current status of deliberations from the Bundesnetzagentur’s point of view following almost a year of detailed discussions.

The industry is being given an opportunity at this early stage to comment on the considerations and on the operative part of the determinations. Formal consultation on complete drafts will begin in the second quarter of the year. The aim is to ensure that the industry is involved as fully and transparently as possible.

The timetable for 2025 is also being published at this stage to make stakeholders aware of the timing of the expert discussions and enable them to plan accordingly.

Background

The legislature has decided that the main ordinances for the regulation of the energy sector will cease to have effect in light of the ruling by the Court of Justice of the European Union in September 2021 on the Bundesnetzagentur’s independence. Instead, the Bundesnetzagentur will issue determinations aligned closely with European Union legislation. The Bundesnetzagentur takes seriously the considerable additional responsibility placed upon it. The Higher Regional Court of Düsseldorf and the Federal Court of Justice will oversee the Bundesnetzagentur’s decisions.

The documents have been published at www.bundesnetzagentur.de/1044186 (in German).

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