FRANKFURT (Reuters) -A German court on Wednesday threw out the rates of return for power and gas network infrastructure operators set in 2021 by the grid regulator, saying companies were right to complain they were too low.
The decision by the Duesseldorf court will not be enforced immediately and can be appealed.
The federal regulator, called the Bundesnetzagentur, had set permitted future returns for new power and gas infrastructure at 5.07%, versus 6.91% previously, leading 900 operators of local distribution networks to launch an appeal.
The rate is applicable for five years from 2024 for power and has been applied from 2023 for gas.
Rates for old infrastructure were set at 3.51%, down from 5.12%.
The court in June heard test cases from 14 selected companies and upheld their arguments, it said in a statement.
"When calculating the upper revenue limits to be collected by the network operators for network use by electricity and gas suppliers, an appropriate return on the equity invested by the network operator must be guaranteed," it said, explaining its decision.
Leading power grid companies including E.ON and EnBW have said they need more money to remain competitive when billions of euros must be spent to accommodate more wind and solar power production plants on the grids.
The court said a market risk premium calculated by the regulator had not been sufficiently backed up by wider plausibility tests and not run versus other internationally set rates reflecting interest rate developments.
Therefore, there was a risk the returns were not competitive and commensurate with the risks being taken.
The regulator is tasked with encouraging investment by operators and institutional investors while not overburdening consumers.
Households and industry help to finance operators' investments through grid fees, which make up a sizeable part of energy bills and have come under greater scrutiny following a surge in energy prices since Russia's full-scale invasion of Ukraine in February 2022.
"We are currently evaluating the verdict. We will then decide on further steps," a spokesperson for the regulator said.
The head of BDEW, Kerstin Andreae, said the utility industry group had criticised the decision as early as 2021 and would welcome an interest-rate adjustments by the regulator.
(Reporting by Vera Eckert and Tom Kaeckenhoff; Editing by Mark Potter and Mark Porter)