2011 Annual Report - OTCIQ.com

waste.” The draft legislation mentions Gorleben as a possible
site but does not seem to conclusively clarify what Gorleben’s
status will be in the planned search process for a final storage
site. It is also unclear whether the federal-state working group
will be able to reach a consensus. An updated version of the
initial draft legislation dated February 2, 2012, contains a passage
for amending Section 21b of Germany’s Atomic Energy Act
such that the costs for “conducting a site-selection process
pursuant to the Site Selection Act” are considered a necessary
expense subject to passthrough and thus are to be born by
entities with a disposal obligation. According to a correct (albeit
not undisputed) interpretation of the law, such a passthrough
of costs is unconstitutional as long Gorleben has not been
deemed unsuitable.
On June 22, 2011, the European Commission issued recommendations
for a directive on energy efficiency. The recommendations
include requiring all energy distributors and all energy
retailers to achieve annual savings of 1.5 percent on the
amount of energy they sell to their customers. The European
legislative process for this directive has just begun. Consequently,
it cannot yet be determined whether such an energysaving
obligation would create risks for E.ON or, if so, what
those risks would be.
In the context of discussions about Europe’s ability to meet
its long-term climate-protection targets in 2050, adjustments
to the emissions-trading directive are under consideration.
They include reducing the number of carbon allowances available
during the next phase (2013–2020) of the EU Emissions
Trading Scheme. Policymakers hope that reducing the number
of allowances will lead to higher carbon prices, which would
create additional incentives for investments in low-carbon generating
capacity. The risks of potentially higher carbon prices
for E.ON’s current fossil-fueled generation portfolio in the EU
can only be assessed when greater clarity exists about the
measures under consideration.
The EU Agency for the Cooperation of Energy Regulators (“ACER”)
issued recommendations for framework guidelines on a
capacity-allocation mechanism and congestion-management
procedures for gas transmission system operators (“TSOs”).
The European Network of Transmission System Operators for
Gas (“ENTSOG”) is tasked with designing network codes that,
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through the comitology process, will become legally binding
for Europe’s TSOs. The codes currently being considered refer
to interconnection points between member states and to
interconnection points between different gas TSOs in a single
member state. Market participants had an opportunity to
take part in an official consultation concerning the recommendations,
which may create risks for existing supply contracts
and for intraday flexibility.
E.ON restructured its six regional distribution companies (“RDCs”)
in Germany in 2008. As part of this process, system operations
were reintegrated into the RDCs so that they function as the
distribution system operator. At the same time, generation
and retail operations were transferred to subsidiaries and the
retail subsidiaries placed under central management. The
regulatory agency views RDCs having ownership interests in
the retail subsidiaries as a violation of unbundling requirements.
In early February 2012, the regulatory agency issued
a ruling in the test case against one RDC and E.ON Energie.
The ruling requires the RDC to relinquish its ownership interest
in the management company and the regional sales subsidiary
within six months of the date the ruling takes effect.
E.ON Energie and the RDC will file an appeal against the ruling.
If, at the end of the multi-year legal process, the agency’s
ruling is deemed legal, the RDCs affected by the ruling would
have to be restructured.
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