* Earnings from grid investments cut as expected
* Levels to apply from 2018, 2019 for 5 years
* Regulator says can raise fees if interest environment
(Adds detail, context)
FRANKFURT, Oct 12 Germany's energy regulator cut
fees for the country's power and gas grids for five years on
The Federal Network Agency (BnetzA) must under a government
brief ensure that grids, in which competition is limited, do not
generate monopoly earnings and are operated cost effectively,
while maintaining reasonable profits for investors.
BnetzA said it reduced fees to 6.91 percent and 5.12
percent, respectively, for new and existing grids.
Currently, they stand at 9.05 percent and 7.14 percent
respectively for new and old grids, representing rates of return
on capital before corporate tax.
Regulated energy transmission assets are the core earnings
vehicles for new energy companies emerging from formerly
integrated top utilities RWE and E.ON.
"The new interest rates that we set reflect lower interest
available in the capital markets," BnetzA's President Jochen
Homann said in a statement.
"This development needed to take into account the interest
of consumers and so lower the earnings levels."
The fees will apply for a five-year period, starting from
2018 for gas grids and from 2019 for power grids.
Both new energy companies and top utilities are trying to
appeal to investors by splitting grids, energy services and
renewable energy activities from loss-making conventional
businesses, which have suffered from weak commodity prices and
rivalry with expanding renewables.
RWE only last week spun off networks, services and
renewables into its Innogy unit, which makes two thirds
of its profits from networks.
"It's not great but it's been expected," a spokesman for
Innogy said, declining to say how it would affect its network
Energy grids are still deemed to be attractive investments
for infrastructure and pension funds because of their steady
Formerly lucrative renewable energy installations such as
solar panels and wind parks are also due to generate lower
income as they change to auction-based models as policymakers
try and limit costs for taxpayers and consumers.
"Investments in networks remain attractive," Homann said,
adding the authority was also flexible if conditions were to
change in future.
(Reporting by Vera Eckert; Additional reporting by Tom
Kaeckenhoff; Editing by Christoph Steitz and Susan Fenton)