BNetzA and BKartA Publish Update of Joint Guideline for Electricity and Gas Concession Agreements

The Federal Network Agency (BNetzA) and the German Cartel Office (BKartA) have published an update of their joint guideline on electricity and gas concession agreements between municipalities and utilities for the use of public property when laying and operating power and gas lines. The update was necessary in view of legislative changes. It also takes new case law into account.

1. Background Information

The topic of the guideline (Leitfadens zur Vergabe von Strom- und Gaskonzessionen) is of considerable financial and factual importance as there are about 20,000 concession agreements in Germany, many of which have run out in the recent past or are about to run out as Section 46 para. 2 EnWG (German Energy Act) stipulates a maximum duration of 20 years. In the recent past a trend to remunicipalise grids could be observed.

President Andreas Mundt of BKartA and President Jochen Homann of BNetzA emphasised that the guideline shall help municipalities to carry out legally water-tight tenders for concessions so that a change of the grid operator is not hampered or delayed by legal uncertainties. Although the guideline is not legally binding it can be expected to have considerable influence on the future practical handling of new concession agreements by municipalities.

New concession agreements do not fall within the scope of the German public procurement law and normally are not covered by Directive 2014/23/EU on the award of concession contracts the guideline points out (cf. guideline no. 14). However, primary EU procurement principles and German and possibly European anti-trust law provisions as well as EnWG principles have be observed when concession agreements are awarded pursuant to Section 46 EnWG. In particular notice of a tender has to be given in a suitable way, contracts have to be awarded in a transparent and non-discriminatory way and the decision has to be substantiated (cf. guideline no. 15).

2. Update

Since the first guideline dating from 2010 many issues have been solved so that the guideline has been updated accordingly.

Since the 2011 amendment of the German Energy Act (EnWG) Section 46 para. 2 EnWG stipulates that in case of a change of concessionaire, the old concessionaire has to transfer ownership of the networks (in consideration of a suitable remuneration) or (if the new concessionaire explicitly demands) has to grant the right to use the networks (in return for a suitable remuneration). Until the clarification by the 2011 amendment it was unclear if the latter was sufficient and BNetzA and BKartA had different opinions on the matter.

Furthermore important judgements by the Federal Court of Justice (Bundesgerichtshof – BGH) of 2013/2014 have brought more legal guidance with regard to the award of concessions in a non-discriminatory, transparent way that respects the principles of fair competition, the guideline says (for more information on the judgements, please see here). BNetzA and BKartA emphasise that their positions have been mostly confirmed and that the courts are of the opinion that the constitutional right of the municipalities to regulate all local affairs on their own responsibility (cf. Article 28 Basic Code) does not prevent competition for concessions in line with the above rules.

The guideline also addresses the following issues:

  • The importance that is given to the different selection criteria;
  • Choosing sub-criteria;
  • The selection process itself;
  • The extent to which the incumbent concessionaire has to disclose information to the municipality; In this regard the guideline already includes the legal requirements made by a yet unpublished BGH judgement (ref. no. EnZR 11/14) in which BGH ruled that the incumbent has to disclose detailed information concerning inter alia the (historical) purchase and production costs, the imputed residual value (kalkulatorischer Restwert) and useful lives (Nutzungsdauer) of the installations (cf. guideline no. 40).

The guideline can be accessed at www.bundesnetzagentur.de/konzessionsvertraege  (in German only).

Source: Federal Network Agency

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