Transmission system operators are sharply criticizing the Federal Network Agency\u2019s draft proposal regarding the future rate of return on capital for gas networks. The rate of return on capital (WACC) proposed by the agency is insufficient to cover actual financing costs. Beyond the natural gas sector, this directly jeopardizes investor confidence in the German regulatory system, which is supposed to permanently guarantee a legally enshrined rate of return on invested capital at an \u201cappropriate, competitive, and risk-adjusted level.\u201d <\/p>\n\n\n\n\n\n\n\n
“In doing so, the BNetzA is directly jeopardizing the investments that remain necessary to ensure the long-term viability of Germany\u2019s gas infrastructure. The ruling contains several implementation errors in the methodological framework that have been substantiated by expert opinions and fails to reflect the reality of the capital markets. We call for an appropriate, capital-market-consistent, and financially sound adjustment of the flat-rate return on capital for the assets of transmission system operators to 5.51%.” <\/em><\/strong>, explains Barbara Fischer, managing director of FNB Gas.<\/p>\n\n\n\n German transmission system operators manage a high-capacity natural gas transmission network that spans approximately 40,000 kilometers. They face extraordinary challenges and new responsibilities in the coming years. They are expected to continue ensuring security of supply through the transmission of natural gas or biomethane\u2014even during a winter when storage facilities are very low. They will also play a key role in the overall energy system as new gas-fired power plant capacity\u2014initiated by the federal government\u2014is integrated into the electricity market. Furthermore, the geopolitical situation and increasing acts of sabotage are placing ever-greater demands on the security and resilience of the infrastructure. Last but not least, by developing the hydrogen backbone network\u2014which is to consist of 60% existing gas pipelines\u2014transmission system operators are making an active contribution to the transformation of the energy system. <\/p>\n\n\n\n All of these tasks and challenges require significant, long-term investments in critical infrastructure. These funds are intentionally to be provided not from public budgets, but through private capital. The financing of these networks and tasks is currently the subject of a consultation process at the Federal Network Agency regarding the determination of the rate of return on capital for the fifth regulatory period. The transmission system operators consider the Federal Network Agency\u2019s proposed WACC of just 3.76% to be inappropriate. First, because the WACC figure was not derived in a methodologically sound manner in five key areas. Second, because it fails to recognize the capital market conditions facing the network operators\u2019 investors. <\/p>\n\n\n\n The basis for the assessment is a financial analysis report that identifies errors in the implementation of the methodology. If the methodology specifically prescribed by the Federal Network Agency is applied correctly, the result is a rate of 4.79%; however, the additional and mandatory consideration of current capital market data leads to a WACC of 5.51%. <\/p>\n\n\n\n Particularly problematic is the interest rate on debt\u2014just 2.43 percent\u2014on which the return on total capital is based. In doing so, the BNetzA\u2019s draft grants network operators a cost of debt that is lower than the yield on safe German government bonds. As a result, the draft assumes that gas network operators could secure financing on more favorable terms than the Federal Republic of Germany itself. The actual cost of debt for transmission system operators during the fifth regulatory period is, depending on the year, up to 1.6 percentage points higher than the regulatory rate of return on debt granted, which leads to a systematic shortfall in coverage of the actual borrowing costs incurred at the transmission network level as a whole. <\/p>\n\n\n\n “<\/strong>A rate of return below the actual cost of financing is not economically viable. Investments in networks, resilience, and transformation would then no longer be feasible. Anyone who expects private investment in critical infrastructure must also make its financing possible. A rate of return that is lower than the actual cost of capital does not create efficiency. It creates a dangerous financing gap and makes investments unattractive to investors.\u201d <\/em><\/strong>, explains <\/em>Dr. Matthias Jenn, CEO of FNB Gas. <\/p>\n\n\n\n The FNB Gas also criticizes what it considers to be an objectively unjustified disparity in the treatment of gas and electricity grid operators. If interest rates are set in different calendar years, this alone results in different capital market data being factored into the calculation, which\u2014given the trend in interest rates in recent years\u2014inevitably leads to a significant disadvantage for gas network operators. <\/strong>\u201cFunding for the gas networks must not be reduced simply because the funding decision is made a few weeks earlier. The timing of the decision must therefore be chosen so that current capital market trends for the entire year of 2026 are factored into the calculations, just as in the electricity sector.\u201d <\/em><\/strong>\u201c, Fischer concluded. <\/em> <\/p>\n\n\n\nDownloads<\/h4>\n <\/div>\n\n \n \n \n