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High-voltage power line

Photo: Daniel Karmann / dpa

If you wonder why energy is so expensive when you look at your electricity bill, sooner or later you will end up with a table full of taxes and levies. He will find that the actual procurement of electricity accounts for "only" 37.5 percent of the price on average. On top of that, there is the electricity tax and other levies, which account for 40 percent of the costs. The remainder is accounted for by network charges; it is the price you pay for the energy to get to your home.

However, the appropriate level of these fees is currently being politically wrestled with. Hundreds of millions of euros are at stake, year after year. On the one hand, it should be attractive for operators to expand the power grids – not least so that the integration of more and more renewable energies, electric cars and heat pumps can succeed. On the other hand, electricity should not become even more expensive for customers. In this conflict of objectives, the Federal Network Agency is now proposing a compromise.

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Accordingly, the authority wants to raise the interest rate that operators of electricity and gas networks receive on their invested capital. However, this should only apply to newly built or expanded network sections. For the time being, the old portfolio is to remain at the previous return.

The background to this is that electricity and gas networks are regional monopolies: there are no competing operators, neither in the city nor in the countryside. Instead, the company that operates the network locally receives a return on its invested capital. In many places, it is municipal utilities or subsidiaries of Germany's largest energy company E.on that operate regional grids. In addition, there are the operators of supra-regional electricity highways and long-distance gas pipelines.

10 to 20 euros more per year

Specifically, the network agency proposes that companies should receive an interest rate of 7.09 percent on their capital invested in new investments in the future. So far, the regulated rate of return is 5.07 percent. The difference comes from a new cost of capital surcharge, which the authority wants to adjust annually to the general interest rate level.

The network agency takes into account how the interest rate environment is currently changing, says President Klaus Müller. The era of record-low interest rates is over. "That's why we want to make new investments more profitable," says Müller, "and thus create tangible incentives for investments by network operators." However, the authority does not want to excessively remunerate the existence of existing networks. After all, the companies have been able to finance themselves very cheaply in recent years. And the burden on households and companies must be "limited to the bare minimum," says Müller.

According to SPIEGEL information, the higher network fees are expected to burden an average household by 10 to 20 euros per year. According to expert estimates, the annual revenues of the network operators are likely to increase by a total of about half a billion euros if the proposals of the network agency were implemented in this way. However, the figures are rough estimates. The concrete effects depend on how much the individual companies will invest in network expansion in the coming years. Therefore, network fees can also develop differently from region to region.

»Putting on it for every euro«

With its initiative, the network agency is responding to persistent warnings from the energy industry. For example, the Association of Municipal Companies recently complained that if the interest rate remained as it is, it would be "only moderately interesting to invest in grid expansion". If operators were to take out loans for this purpose, they would "make an immediate loss with every euro borrowed," said Chief Executive Ingbert Liebing, because the regulated return is still characterized by the low interest rate phase.

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Germany's largest distribution system operator E.on also said earlier: "For every euro we invest at current regulatory returns, we put money on it."

Billions of euros in investment are needed to connect new wind and solar farms and to equip the local grids for the ramp-up of electric cars and heat pumps. If this is not achieved in time, it may happen more frequently in the future that grid operators, for example, temporarily throttle the output of private charging stations.

The network agency now wants to submit its compromise proposal for consultation by the end of August. The new interest rate should then come into force at the turn of the year if possible.