Germany orders E.ON to reduce grid access charges by 16%

Germany orders E.ON to reduce grid access charges by 16%

Freiburg (Platts)--30Aug2006

The federal network agency, Germany's energy regulator, has ordered
E.ON's network arm to cut its grid access charges by 16%, thereby completing
its investigation into the charges of Germany's four transmission system
operators, it said Wednesday.
The other three TSOs had previously received orders to cut their charges
as follows: Vattenfall Europe by 18%, RWE Transportnetz Strom by 9% and ENBW
Transportnetze by 8%. The charges have to be cut by different amounts because
they are based on calculations individual to each companies.
Amongst others, the reductions concern asset evaluation, interest on
capital and corporation tax, and will lead to varying cuts in the charges for
use of the high voltage grids, depending on the number of hours the grid is
used for. The new tariffs for transmission are an essential part of costing
and price calculation for the distribution grids. Cuts in those are passed on
to end users.
The regulator has also ordered RWE Westfalen-Weser-Ems distribution arm
to cut its charges by 10%. The reductions, for the second-largest distributor
of the state of North Rhine-Westphalia, concern interest on own capital,
corporation tax and cost for grid infrastructure (asset evaluation). This cut
will mean a reduction of about 8% for an average household.
Both orders are valid from September 1, 2006 to the end of 2007.
The regulator expects a decision on the charges for 20 further
distribution grid operators within the next four weeks. Those 20 companies
operate about 80% of the market volume.
Kurth said that only a "coordinated bundle of measures will improve
competition." The need for action in the energy markets was "complex and
extensive," he added.
During the presentation of the regulator's monitoring report Wednesday,
Kurth said the offer side in the market had to be improved in the long run, in
addition to the control on grid charges. Fair conditions on grid connections
of new power plants were just as important as the simplification of switching
through competitive processes, he said.
On the power side, grid access charges make up about 38% of the final
price, compared with 22% on the gas side.

FIRST GAS ORDERS
Also Wednesday, the agency ordered the first two fee reductions for
access to the gas pipeline network. The cases concern the distribution network
operators E.ON Thuringer Energie and E.ON Mitte, which have been ordered to
lower their charges by 9.5% and 11% respectively. E.ON Thuringer Energie
supplies about 110,000 household and business customers, while E.ON Mitte has
about 95,000 customers in the sector. The new charges take immediate effect
and run till March 31, 2008.

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