(Bloomberg) -- Germany’s energy network operators lost their legal fight to increase returns on grid investments at the country’s top civil court, which dismissed their challenges.
The Federal Court of Justice in Karlsruhe overturned a lower court ruling in their favor and upheld the Federal Network Agency’s 2021 decision, which capped how much network operators can charge electricity and gas suppliers for grid use. The judges decided late on Tuesday evening, according to a court spokesman, who didn’t provide more details.
About 900 energy companies in Germany have sued the federal agency to challenge its 2021 decision. The cap is calculated as a rate of return on grid spending, and the task of the regulator is to ensure that energy network investors get an appropriate return on equity. Grid operators are bound by these rates when charging network costs and utilities pass these fees on to energy consumers.
Markets have closely followed the case as the ruling will also impact potential network sales.
On Tuesday morning, the court heard oral argument in suits by 14 operators. During the hearing, Presiding Judge Wolfgang Kirchhoff predicted that the tribunal would dismiss the challenges. The network agency “has a margin of discretion in choosing the right methods to calculate these rates,” Kirchhoff said. “A court may not undermine it by choosing the method itself instead of the regulator.”
While any increase in rates would make investment more attractive, it would also increase power prices in Germany. Industry in the country has already been struggling with high energy costs and many companies have threatened to relocate abroad if prices rise further.
The German government is seeking to regain minority control of its largest power grid operator, Tennet Holding BV, which the Dutch government has put up for sale. The nation’s largest power producer, RWE AG, is also looking to sell a stake of around €2 billion ($2.1 billion) in grid operator Amprion GmbH.
In its Oct. 2021 decision, the Federal Network Agency set the interest rate at 5.07% for new assets and 3.51% for old ones. One percentage point return on equity for the regulatory period, which covers 2024 to 2028, corresponds to a volume of around €1 billion, according to an estimate by German utility association VKU.
(Updates with case background starting in third paragraph.)
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