Updated VKU/DST/DStGB Brochure on Concession Agreements

The Association of German Municipal Enterprises (VKU), the German Association of Cities (DST) and the German Association of Towns and Municipalities DStGB) have presented the update of their jointly published broschure on concession agreements. The brochure is intended to provide support and guidance for municipalities and municipal companies.

Concession agreements regulate in particular the use of public property for laying and operating power and gas lines and the consideration paid in return.

As the three associations point out, the last years have seen a trend towards remunicipalisation of some grids and power supply. Since 2007, 60 municipal utitilties were founded and 170 concessions transferred to municipalities or municipal companies. Besides, many existing agreements in the electricity and gas sector are about to expire in 2015 and 2016.

The updated broschure focuses on the legal energy framework, grid issues and possibilities for newly founded municipal utilities and those still to be founded to develop and thrive. Many legal issues regarding the transfer of the grid from the previous concessionaire to the new concessionaire like the criteria for calculating the purchase price, the extent to which assets and grid-related information have to be transferred, are still disputed.

Municipalities interested in a remunicipalisation often do not have the financial means and technical know-how to set up and operate utilities on their own. They are therefore often considering to involve private partners.

Source: VKU

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