Subsequent to the hearing on 17/01/2018, the Court today rendered its decision in one of the economically most significant cases in the regulated energy industry: The rate of return on equity stipulated by the German Federal Network Agency (Bundesnetzagentur – BNetzA) for the 3rd regulatory period was ruled as having been set too low and thus being inadequate. This was the judgement delivered today by the Higher Regional Court (OLG) of Düsseldorf, which endorsed the arguments put forward by BBH. The BNetzA will now have to recalculate the rate of return. From an economic point of view, we are talking about hundreds of millions of Euro.
At the end of 2016, the BNetzA had lowered the rate of return on equity for the 3rd regulatory period from 9.05% to 6.91% for new installations and from 7.14% to 5.12% for existing installations. This was a hard blow for the stakeholders as the companies’ rate of return was reduced by almost 25%. It also meant that the budget available to operators of electricity and gas grids for securing system operation – a task that has become ever more difficult due to the energy transition – was reduced by approx. 2 billion Euro compared to the budget in the 2nd regulatory period.
The stakeholders reacted accordingly: Approximately 1,100 complaints from grid operators against the determination of the BNetzA were filed with the Higher Regional Court (Oberlandesgericht – OLG) of Düsseldorf, making it the largest proceedings handled by the court so far, as the presiding judge Laubenstein mentioned at the beginning of the hearing. About 600 of the complainants have been advised by a BBH team headed by partners Stefan Missling and Rudolf Böck. The court had to decide on the basis of 29 model case proceedings as to whether the BNetzA’s drastic cut of the rate of return on equity was lawful. Following the hearing of 17/01/2018, the court ruled today that this was not the case.
BBH lawyer Stefan Missling, who handled the cases of 600 complainants together with lawyer Heiko Lange, is happy with the result: “The Higher Regional Court has confirmed our view, which was supported by three renowned experts, and established that the approach taken by the BNetzA to stipulate the rate of return on equity was incorrect, resulting in rates being too low. This is a major success for the stakeholders who acted with great unanimity.” Auditor and tax advisor Rudolf Böck adds: “Security of supply does not come at discount prices, even less so given the challenges that the grids are facing in view of the energy and transport transition.”
The Higher Regional Court of Düsseldorf granted leave to appeal on points of law to the German Federal Court of Justice (Bundesgerichtshof). Now, it remains to be seen whether the BNetzA will appeal to the Federal Court of Justice.
Becker Büttner Held is a leading provider of advisory services for energy and infrastructure companies and their customers. Energy and supply companies, particularly public utilities, municipalities and local authorities, industrial companies and international groups are among its core clients. BBH advises these and many other companies and organisations in all legal matters and also assists them with business and strategic advice.
Dr. Ines Zenke
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