E.ON highlights uncertainty over German grid funding reforms

FRANKFURT (Reuters) -E.ON, Europe's largest energy network operator, on Wednesday said it was concerned that new regulations on how much German power grid operators can earn on investments will not adequately reward their financing.

E.ON finance chief Nadia Jakobi, speaking to investors after presenting nine-month results, said uncertainty around the regulation, which sets power grid returns for the five years from 2029, was "greater than we had expected by now".

Germany's grid regulator is currently in the process of finalising a reform proposal in which caps are set on grid companies' earnings to balance the need to keep down consumer bills against incentives for investors.

"The current draft of the framework does not fairly reflect grid operators' financing cost," Jakobi said, adding it was possible that E.ON would assess legal options if the final proposal was too far off the company's expectations.

REGULATOR SETS RETURNS

E.ON shares fell to their lowest in more than two months and were down 4.5% at 1226 GMT.

Grid operators, including E.ON, say they need higher earnings caps to pay for the expansion of power grids that is needed to provide infrastructure for AI-driven data centres.

The wording of the regulator's current recommendations on the grid funding reform is not publicly available.

Jakobi said the regulator had indicated that the current version of the regulations was "close to final", and added that "proposals as a whole must be sufficiently attractive to promote investments."

Bernstein analysts said it was unclear whether E.ON would have sufficient clarity by February 2026 to take a decision to upgrade investments in its German networks.

Earlier, E.ON said its investments rose 8% in the first nine months of the year and also confirmed its outlook for 2025.

($1 = 0.8575 euros)

(Reporting by Christoph Steitz and Vera Eckert, Editing by Miranda Murray and Jane Merriman)