X Factor: Bill for General Sector-related Productivity Rate Factor Passes Parliament

Against the votes of the Left Party and with the SPD party abstaining, the ruling CDU/CSU and FDP coalition adopted an amendment of the German Energy Act (EnWG, ref. no. 17/7632) as amended by the Economics Committee (17/7984). The bill aims to create the statutory basis for a general sector-related productivity rate (genereller sektoraler Produktivitätsfaktor) in the Incentive Regulation Ordinance (ARegV). The so-called X factor (Xgen) is part of the regulation formula in the ARegV that determines the revenue caps for the grid fees German network operators can charge.

In June the Federal Court of Justice (BGH) had held that the general sector-related productivity rate pursuant to Section 9 para. 1 ARegV may not be applied as it lacks a statutory basis in Section 21a German Energy Act (EnWG) that gives the legislative authority to issue ARegV. In order to legalise the factor that is commonly referred to as “Xgen”, the government proposed an EnWG amendment that leaves the general sector-related productivity rates for the first and the second regulation period at their previous level of 1.25% respectively 1.5%.

The Bundestag dismissed a motion by the SPD (ref. no. 17/7989) which demanded an amendment of the EnWG according to which the sector related productivity rate factor should be calculated based on grid related data and should differentiate between the electricity and the gas sector. Besides, the SPD called for an amendment of ARegV so as to set more incentives for investments in the German electricity networks.

The bill still has to be approved by the Bundesrat, the legislative body that represents the federal states. According to the energy information provider energate, the Bundestag will vote on the matter in its session on 16 December 2011.

The new Xgen bill has also been considered unlawful by some, and it remains to be seen how the renewed X factor will hold up against legal challenges.

Source: Bundestag

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