German court annuls energy regulator’s decisions on electricity redispatch

The Higher Regional Court of Düsseldorf (OLG Düsseldorf) today annulled a decision of the German regulator Bundesnetzagentur (BNetzA) concerning the compensation of so-called ‘redispatch’ measures. Frontier (Europe) supported RWE, Germany’s largest electricity producer, who were one of the leading claimants in the process leading to this decision.

When there is congestion on the electricity grid, network operators request that power plant operators adjust their electricity production to avoid supply interruptions. This redispatch cannot be done on a market basis as only a small number of plants are located appropriately to offer these services. To overcome this, BNetzA issued a decision in 2012 determining the level of compensation for redispatch. However, 25 plant operators appealed that decision, arguing that the compensation would be too low.

The Court has now agreed with the claimants, requesting compensation that not only covers direct costs such as fuel costs, but also the opportunity costs of redispatch. In contrast to the arguments made by BNetzA, the court agreed that opportunity costs do arise because plants that are being redispatched are losing the flexibility to benefit from trades in short-term markets such as the intraday market.

Frontier (Europe) regularly supports private utilities as well as state authorities in disputes of various kinds.

For more information, please contact please contact Miriam Rau at m.rau@frontier-economics.com, or call +49 221 337 131 00

 

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Related Sectors:
Energy
Related Disciplines:
Market design and auctions
Dispute support
Regulation