Germany’s energy regulator, the Bundesnetzagentur (BNetzA), has today published its decision on the allowed cost of equity for electricity and gas networks in Germany.
For the third price control period BNetzA decided an allowed return on equity of 6.91% (before corporation tax, an additional allowance is granted for local trade tax, Gewerbesteuer). The third price control period starts in 2018 for gas and 2019 for electricity.
In determining the risk premium for equity, BNetzA relies, as in previous price control determinations, on a study by Frontier Economics, which concluded that the regulator had some discretion to set the cost of equity within an interval of adequate returns.
Frontier regularly advises companies and authorities on cost of capital and other regulatory issues.
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