Klaus Müller, President of the Federal Network Agency, wants to increase the return on equity for electricity and gas network operators from 5.07 percent to 7.09 percent in 2024.
These higher profit opportunities are intended to create new incentives for investments and to implement the federal government’s plans for network expansion.
However, as a result, the already high electricity and gas prices are likely to rise further.
The Corona crisis and the outbreak of the Ukraine war have Energy prices in Germany shoot up sharply. During a kilowatt hour (kWh) of electricity in 2021 according to the Comparison portal Verivox still cost an average of 30.73 cents, the average electricity price for households in the year to date for 2023 is around 46.91 cents per kilowatt hour. But gas prices are still at a high level. Instead of 5.65 cents per kilowatt hour as in 2020, consumers are currently paying an average of 16.11 cents per kilowatt hour – almost three times as much.
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This price development is already a major concern for energy consumers. And indeed, electricity and gas prices could soon rise even further. Because like the “Handelsblatt“ reports, Klaus Müller, President of the Federal Network Agency, concedes that the operators of electricity and gas networks have higher returns – with consequences for the network charges that customers pay.
Increasing the interest on equity should create incentives for investments
According to “Handelsblatt” information, network agency president Klaus Müller would like to increase the return on equity for network operators from 5.07 percent to 7.09 percent in the coming year. This means that network operators in Germany will be able to generate higher returns in the future. This step is intended to provide new incentives for investments create and help to fulfill the federal government’s plans for grid expansion.
However, this could be expensive for consumers. Because the higher the interest on equity, the higher the network charges that you have to pay for electricity and gas. How exactly the higher interest rate will affect electricity and gas prices from 2024 is currently unclear. According to the “HandelsblattBut higher prices are likely. Nevertheless, Müller emphasizes that the Federal Network Agency is also “cost monitor for private households, small and medium-sized companies and for the Industry.“
Müller plans further changes
Müller’s predecessor, Jochen Homann, only set the return on equity for new investments at 5.07 percent in 2021. However, the network operators have criticized in recent months that this value has changed in the course of the Interest rate and investment environment was set too low. According to the report, the network agency now wants to react to this development. However, according to Müller, the new regulation only applies to new investments and not to existing networks.
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In addition, Müller plans to no longer determine the interest on equity every five years, but every year. In this way you can “react more dynamically to interest rate developments,” he told the “Handelsblatt.”
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