Federal Network Agency: Not Higher Revenue But Shorter Approval Procedures Encourage Grid Expansion

Allowing network operators a higher revenue would do more harm than good, the president of the Federal Network Agency told the Handelsblatt. Instead, approval procedures for modernisation and expansion projects had to be simplified and streamlined, he said.

A debate about higher grid charges would lead to network operators and investors postponing grid projects until the return on investment was certain, Mr Kurth said.

Mr Kurth’s remark was a reaction to the conclusions of the EU Energy Summit of 4 February 2011, Handelsblatt reported. The final communication inter alia mentions that it was “vital to promote a regulatory framework attractive to investment” to modernise and expand Europe’s energy infrastructure and to interconnect networks across borders.

According to Mr Kurth, it is much more important to cut red tape. The complex planning and approval procedures have to be streamlined speedily he said. This is also an issue the EU has to address. Many national approval procedures are based on EU requirements, he added.

At the presentation of the Federal Network Agency’s Monitoring Report 2010in December last year, Mr Kurth had already rejected higher grid charges, saying current data did not support higher yields. At the time he had pointed out that the Agency supported network operators for example by approving investment budgets

In Germany, the German Energy Act (EnWG) and the Incentive Regulation Ordinance (ARegV) provide for a revenue-cap regulation regarding the operation of the networks. Transmission system operators (TSOs) can apply to the Federal Network Agency with respect to investment budgets pursuant to Section 23  ARegV for expansion and restructuring projects, including the grid connection of off-shore wind farms and (under certain conditions) underground power lines. The approval of the investment budget ultimately allows TSOs to include the additional costs in their calculation of grid fees as provided for in the Incentive Regulation Ordinance.

In late December 2010 the Federal Network Agency also opened a consultation process for the introduction of network reliability as a quality element in the Incentive Regulation Ordinance (Anreizregulierungsverordnung – ARegV) starting 1 January 2012. The ARegV provides that surcharges or reductions on the grid access charges can be stipulated by the regulator if a network operators exceeds or misses quality targets concerning the network reliability (Netzzuverlässigkeit) and network performance (Netzleistungsfähigkeit). The Federal Network Agency has some leeway in introducing quality elements in the regulation. It remains to be seen what conclusions the Federal Network Agency will draw from the consultation.

Source: Handelsblatt

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