Obbligazione Eurogrid Network 3.875% ( XS0551935769 ) in EUR

Emittente Eurogrid Network
Prezzo di mercato 100 EUR  ▼ 
Paese  Germania
Codice isin  XS0551935769 ( in EUR )
Tasso d'interesse 3.875% per anno ( pagato 1 volta l'anno)
Scadenza 22/10/2020 - Obbligazione è scaduto



Prospetto opuscolo dell'obbligazione Eurogrid XS0551935769 in EUR 3.875%, scaduta


Importo minimo 50 000 EUR
Importo totale 500 000 000 EUR
Descrizione dettagliata Eurogrid è una rete di trasporto dell'energia elettrica ad alta tensione che collega diversi paesi europei, facilitando lo scambio di energia e promuovendo l'integrazione del mercato elettrico europeo.

The Obbligazione issued by Eurogrid Network ( Germany ) , in EUR, with the ISIN code XS0551935769, pays a coupon of 3.875% per year.
The coupons are paid 1 time per year and the Obbligazione maturity is 22/10/2020







Eurogrid GmbH
(incorporated with limited liability in Germany)
Euro 2,500,000,000
Guaranteed Euro Medium Term Note Programme
guaranteed by 50Hertz Transmission GmbH and 50Hertz Offshore GmbH
(each incorporated with limited liability in Germany)
Under the Guaranteed Euro Medium Term Note Programme described in this Prospectus (the "Programme"), Eurogrid GmbH (the "Issuer"),
subject to compliance with all relevant laws, regulations and directives, may from time to time issue Guaranteed Euro Medium Term Notes
guaranteed by 50Hertz Transmission GmbH and 50Hertz Offshore GmbH (the "Guarantee" and the "Guarantors", respectively) (the
"Notes"). The aggregate nominal amount of Notes outstanding will not at any time exceed Euro 2,500,000,000 (or the equivalent in other
currencies).
Application has been made to the Commission de Surveillance du Secteur Financier (the "CSSF") in its capacity as competent authority under
the Luxembourg Act dated 10 July 2005 relating to prospectuses for securities, for the approval of this Prospectus as a base prospectus for the
purposes of Article 5.4 of Directive 2003/71/EC (the "Prospectus Directive"). Application has been made to the Luxembourg Stock Exchange
for the Notes issued under the Programme to be admitted to the official list of the Luxembourg Stock Exchange (the "Official List") and to be
admitted to trading on the Luxembourg Stock Exchange's regulated market. References in this Prospectus to Notes being "listed" (and all
related references) shall mean that such Notes have been admitted to the Official List and admitted to trading on the Luxembourg Stock
Exchange's regulated market. The Luxembourg Stock Exchange's regulated market is a regulated market for the purposes of Directive
2004/39/EC of the European Parliament and of the Council on markets in financial instruments. However, unlisted Notes may be issued
pursuant to the Programme. The relevant Final Terms in respect of the issue of any Notes will specify whether or not such Notes will be listed
on the Official List and admitted to trading on the Luxembourg Stock Exchange's regulated market (or any other stock exchange).
Each Series (as defined in "Overview of the Programme -- Method of Issue") of Notes in bearer form will be represented on issue by a
temporary global note in bearer form (each a "temporary Global Note") or a permanent global note in bearer form (each a "permanent Global
Note"). If the Global Notes are stated in the applicable Final Terms to be issued in new global note ("NGN") form, the Global Notes will be
delivered on or prior to the original issue date of the relevant Tranche to a common safekeeper (the "Common Safekeeper") for Euroclear
Bank S.A./N.V. ("Euroclear") and Clearstream Banking, société anonyme ("Clearstream, Luxembourg"). Notes in registered form will be
represented by registered certificates (each a "Certificate"), one Certificate being issued in respect of each Noteholder's entire holding of
Registered Notes of one Series. Registered Notes issued in global form will be represented by registered global certificates ("Global
Certificates"). If a Global Certificate is held under the New Safekeeping Structure (the "NSS") the Global Certificate will be delivered on or
prior to the original issue date of the relevant Tranche to a Common Safekeeper for Euroclear and Clearstream, Luxembourg.
Global notes which are not issued in NGN form ("Classic Global Notes" or "CGNs") and Global Certificates which are not held under the NSS
will be deposited on the issue date of the relevant Tranche with a common depositary on behalf of Euroclear and Clearstream, Luxembourg (the
"Common Depositary").
The provisions governing the exchange of interests in Global Notes for other Global Notes and definitive Notes are described in "Summary of
Provisions Relating to the Notes while in Global Form".
Tranches (as defined in "Overview of the Programme -- Method of Issue") of Notes to be issued under the Programme will be rated or unrated.
Where a Tranche of Notes is to be rated, such rating will not necessarily be the same as the rating assigned to the Programme. A security rating
is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning
rating agency.
Prospective investors should have regard to the factors described under the section headed "Risk Factors" in this Prospectus.
Arrangers and Dealers for the Programme
BNP PARIBAS
DEXIA CAPITAL MARKETS
ING COMMERCIAL BANKING
THE ROYAL BANK OF SCOTLAND
The date of this Base Prospectus is 8 October 2010


This Prospectus comprises a base prospectus for the purposes of Article 5.4 of Directive 2003/71/EC
(the "Prospectus Directive") and for the purpose of giving information with regard to the Issuer, the
Guarantors and their subsidiaries and affiliates taken as a whole (the "Group") and the Notes which,
according to the particular nature of the Issuer, the Guarantors and the Notes, is necessary to enable
investors to make an informed assessment of the assets and liabilities, financial position, profit and
losses and prospects of the Issuer and the Guarantors.
The Issuer and the Guarantors (the "Responsible Persons") accept responsibility for the information
contained in this Prospectus. To the best of the knowledge of the Issuer and the Guarantors (each
having taken all reasonable care to ensure that such is the case) the information contained in this
Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such
information. This Prospectus is to be read in conjunction with all documents which are incorporated
herein by reference (see "Documents Incorporated by Reference").
No person has been authorised to give any information or to make any representation other than those
contained in this Prospectus in connection with the issue or sale of the Notes and, if given or made, such
information or representation must not be relied upon as having been authorised by the Issuer, the
Guarantors or any of the Arrangers or the Dealers (as defined in "Overview of the Programme").
Neither the delivery of this Prospectus nor any sale made in connection herewith shall, under any
circumstances, create any implication that there has been no change in the affairs of the Issuer or the
Guarantors since the date hereof or the date upon which this Prospectus has been most recently
amended or supplemented or that there has been no adverse change in the financial position of the
Issuer or the Guarantors since the date hereof or the date upon which this Prospectus has been most
recently amended or supplemented or that any other information supplied in connection with the
Programme is correct as of any time subsequent to the date on which it is supplied or, if different, the
date indicated in the document containing the same.
In the case of any Notes which are to be admitted to trading on a regulated market within the European
Economic Area or offered to the public in a Member State of the European Economic Area in
circumstances which require the publication of a prospectus under the Prospectus Directive, the
minimum specified denomination shall be 50,000 (or its equivalent in any other currency as at the date
of issue of the Notes).
The distribution of this Prospectus and the offering or sale of the Notes in certain jurisdictions may be
restricted by law. Persons into whose possession this Prospectus comes are required by the Issuer, the
Guarantors, the Arrangers and the Dealers to inform themselves about and to observe any such
restriction. The Notes have not been and will not be registered under the United States Securities Act of
1933, as amended (the "Securities Act") and include Notes in bearer form that are subject to U.S. tax
law requirements. Subject to certain exceptions, Notes may not be offered, sold or delivered within the
United States or to U.S. persons. For a description of certain restrictions on offers and sales of Notes
and on distribution of this Prospectus, see "Subscription and Sale".
This Prospectus does not constitute an offer of, or an invitation by or on behalf of the Issuer, the
Guarantors or the Dealers to subscribe for, or purchase, any Notes.
To the fullest extent permitted by law, none of the Arrangers or the Dealers accept any responsibility
for the contents of this Prospectus or for any other statement, made or purported to be made by the
Arrangers or a Dealer or on its behalf in connection with the Issuer, the Guarantors, or the issue and
offering of the Notes. The Arrangers and each Dealer accordingly disclaim all and any liability whether
arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in
respect of this Prospectus or any such statement. Neither this Prospectus nor any other financial
2


statements are intended to provide the basis of any credit or other evaluation and should not be
considered as a recommendation by any of the Issuer, the Guarantors, the Arrangers or the Dealers
that any recipient of this Prospectus or any other financial statements should purchase the Notes. Each
potential purchaser of Notes should determine for itself the relevance of the information contained in
this Prospectus and its purchase of Notes should be based upon such investigation as it deems
necessary. None of the Arrangers or the Dealers undertakes to review the financial condition or affairs
of the Issuer or the Guarantors during the life of the arrangements contemplated by this Prospectus
nor to advise any investor or potential investor in the Notes of any information coming to the attention
of any of the Arrangers or the Dealers.
In connection with the issue of any Tranche, the Dealer or Dealers (if any) named as the stabilising
manager(s) (the "Stabilising Manager(s)") (or any person acting on behalf of any Stabilising
Manager(s)) in the applicable Final Terms may over-allot Notes or effect transactions with a view to
supporting the market price of the Notes at a level higher than that which might otherwise prevail.
However, there is no assurance that the Stabilising Manager(s) (or any person acting on behalf of any
Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after
the date on which adequate public disclosure of the terms of the offer of the relevant Tranche is made
and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the
issue date of the relevant Tranche and 60 days after the date of the allotment of the relevant Tranche.
Any stabilisation action or over-allotment must be conducted by the relevant Stabilising Manager(s) (or
any person acting on behalf of any Stabilising Manager(s)) in accordance with all applicable laws and
rules.
In this Prospectus, unless otherwise specified or the context otherwise requires, references to "",
"Euro", "EUR" or "euro" are to the single currency introduced at the start of the third stage of the
European economic and monetary union pursuant to the Treaty on the Functioning of the European
Union, as amended, references to "£", "pounds sterling", "GBP" and "Sterling" are to the lawful
currency of the United Kingdom and references to "$", "USD" and "U.S. Dollars" are to the lawful
currency of the United States of America.
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TABLE OF CONTENTS
Page
DOCUMENTS INCORPORATED BY REFERENCE...................................................................................... 5
PROSPECTUS SUPPLEMENT ........................................................................................................................ 8
RISK FACTORS ................................................................................................................................................ 9
OVERVIEW OF THE PROGRAMME............................................................................................................ 21
TERMS AND CONDITIONS OF THE NOTES ............................................................................................. 27
SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM ...................... 51
USE OF PROCEEDS....................................................................................................................................... 57
BUSINESS DESCRIPTION OF ISSUER ....................................................................................................... 58
BUSINESS DESCRIPTION OF GUARANTORS ­ 50HERTZ TRANSMISSION GMBH .......................... 61
BUSINESS DESCRIPTION OF GUARANTORS ­ 50HERTZ OFFSHORE GMBH................................... 73
TAXATION...................................................................................................................................................... 75
SUBSCRIPTION AND SALE ......................................................................................................................... 80
FORM OF FINAL TERMS.............................................................................................................................. 83
GENERAL INFORMATION........................................................................................................................... 94
4


DOCUMENTS INCORPORATED BY REFERENCE
The pages specified below of the following documents which have previously been published or are
published simultaneously with this Prospectus and which have been filed with the CSSF are incorporated by
reference into and form part of this Prospectus: (i) the Annual Report for the financial year ended 31
December 2008 (the "Financial Year 2008") of 50Hertz Transmission GmbH, (ii) the Annual Report for the
financial year ended 31 December 2009 (the "Financial Year 2009") of 50Hertz Transmission GmbH, (iii)
the Report for the short financial year from 1 January 2010 to 31 May 2010 (the "Short Financial Year
2010") (Bericht über das Rumpfgeschäftsjahr 2010 des Konzerns 50Hertz und der 50Hertz Transmission
GmbH) containing the non-consolidated financial statements of 50Hertz Transmission GmbH for the Short
Financial Year 2010, (iv) the Report for the Short Financial Year 2010 (Bericht über das Rumpfgeschäftsjahr
2010 des Konzerns 50Hertz und der 50Hertz Transmission GmbH) containing the consolidated financial
statements of 50Hertz Transmission GmbH for the Short Financial Year 2010, (v) the Annual Report for the
Financial Year 2008 (Bericht über das Geschäftsjahr 2008) of 50Hertz Offshore GmbH, and (vi) the Annual
Report for the Financial Year 2009 (Bericht über das Geschäftsjahr 2009) of 50Hertz Offshore GmbH, which
in each case includes the auditor's report (Bestätigungsvermerk) in respect thereof. The pages specified in the
table below shall be incorporated in and form part of this Prospectus, save that any statement contained on
such pages incorporated by reference herein shall be modified or superseded for the purpose of this
Prospectus to the extent that a statement contained herein modifies or supersedes such earlier statement
(whether expressly, by implication or otherwise). Any statement so modified or superseded shall not, except
as so modified or superseded, constitute a part of this Prospectus.
Any information, which is not listed in the tables below, but included in the documents below is given for
information purposes only, and does not form part of this Prospectus. The non-incorporated parts of the
documents incorporated by reference are not relevant for investors.
Copies of the documents incorporated by reference in this Prospectus may be obtained (without charge) from
the registered office of the Issuer and the website of the Luxembourg Stock Exchange (www. bourse.lu).
Extracted from: 50Hertz Transmission GmbH (under its former name Vattenfall Europe Transmission
GmbH) ­ Annual Report 2008 (containing the non-consolidated financial statements of 50Hertz
Transmission GmbH for the Financial Year 2008)
Balance Sheet (Bilanz) .............................................................................................................
Pages 20-21
Profit and Loss Account (Gewinn- und Verlustrechnung)........................................................
Page 22
Cash Flow Statement (Kapitalflussrechnung)..........................................................................
Page 23
Notes (Anhang) ........................................................................................................................
Pages 26-33
Auditor's Report (Bestätigungsvermerk) .................................................................................
Page 35
Extracted from: 50Hertz Transmission GmbH ­ Annual Report 2009 (containing the non-consolidated
financial statements of 50Hertz Transmission GmbH for the Financial Year 2009)
Balance Sheet (Bilanz) ............................................................................................................
Pages 26-27
Profit and Loss Account (Gewinn- und Verlustrechnung)........................................................
Page 28
Cash Flow Statement (Kapitalflussrechnung)..........................................................................
Page 29
5


Notes (Anhang) ........................................................................................................................
Pages 32-42
Auditor's Report (Bestätigungsvermerk) ................................................................................
Page 43
Extracted from: 50Hertz Transmission GmbH ­ Report for the Short Financial Year 2010 (Bericht über
das Rumpfgeschäftsjahr 2010 des Konzerns 50Hertz und der 50Hertz Transmission GmbH) (containing
the non-consolidated financial statements of 50Hertz Transmission GmbH for the Short Financial Year
2010)
Balance Sheet (Bilanz) .............................................................................................................
Page 27
Income Statement (Gewinn- und Verlustrechnung)..................................................................
Page 28
Cash Flow Statement (Kapitalflussrechnung)..........................................................................
Page 29
Notes (Anhang) ........................................................................................................................
Pages 31-49
Pages A-1­
Auditor's Report (Bestätigungsvermerk) ) ..............................................................................
A-2
Extracted from: 50Hertz Transmission GmbH ­ Report for the Short Financial Year 2010 (Bericht über
das Rumpfgeschäftsjahr 2010 des Konzerns 50Hertz und der 50Hertz Transmission GmbH) (containing
the consolidated financial statements of 50Hertz Transmission GmbH for the Short Financial Year
2010)
Balance Sheet (Bilanz) .............................................................................................................
Page 27
Income Statement (Gewinn- und Verlustrechnung)..................................................................
Page 28
Cash Flow Statement (Kapitalflussrechnung)..........................................................................
Page 30
Notes (Konzernanhang) ...........................................................................................................
Pages 32-51
Pages A-1­
Auditor's Report (Bestätigungsvermerk) ................................................................................
A-2
Extracted from: 50Hertz Offshore GmbH (under its former name Vattenfall Europe Baltic Offshore
Grid GmbH)­ Annual Report for the Financial Year 2008 (Bericht über das Geschäftsjahr 2008)
(containing the non-consolidated financial statements of 50Hertz Offshore GmbH for the Financial
Year 2008)
Balance Sheet (Bilanz) .............................................................................................................
Page 8
Income Statement (Gewinn- und Verlustrechnung)..................................................................
Page 9
Cash Flow Statement (Kapitalflussrechnung)..........................................................................
Page 5
Notes (Anhang) ........................................................................................................................
Pages 10-13
Pages A-1­
Auditor's Report (Bestätigungsvermerk) ................................................................................
A-2
Extracted from: 50Hertz Offshore GmbH ­ Annual Report for the Financial Year 2009 (Bericht über
das Geschäftsjahr 2009) (containing the non-consolidated financial statements of 50Hertz Offshore
GmbH for the Financial Year 2009)
6


Balance Sheet (Bilanz) .............................................................................................................
Page 11
Income Statement (Gewinn- und Verlustrechnung)..................................................................
Page 12
Notes (Anhang) ........................................................................................................................
Pages 13-19
Pages A-1 ­
Auditor's Report (Bestätigungsvermerk) ................................................................................
A-2
The Short Financial Year 2010 financial statements were produced as a result of the acquisition by the Issuer
of 50Hertz Transmission GmbH.
7


PROSPECTUS SUPPLEMENT
If at any time the Issuer shall be required to prepare a prospectus supplement pursuant to Article 13 of the
Luxembourg Act dated 10 July 2005 relating to prospectuses for securities, the Issuer will prepare and make
available an appropriate amendment or supplement to this Prospectus which, in respect of any subsequent
issue of Notes to be listed on the Official List and admitted to trading on the Luxembourg Stock Exchange's
regulated market, shall constitute a prospectus supplement as required by Article 13 of the Luxembourg Act
dated 10 July 2005 relating to prospectuses for securities.
Each of the Issuer and the Guarantors has given an undertaking to the Dealers that if at any time during the
duration of the Programme there is a significant new factor, material mistake or inaccuracy relating to
information contained in this Prospectus which is capable of affecting the assessment of any Notes and whose
inclusion in or removal from this Prospectus is necessary for the purpose of allowing an investor to make an
informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the
Issuer and the Guarantors, and the rights attaching to the Notes, the Issuer shall prepare an amendment or
supplement to this Prospectus or publish a replacement Prospectus for use in connection with any subsequent
offering of the Notes and shall supply to each Dealer such number of copies of such supplement hereto as
such Dealer may reasonably request.
8


RISK FACTORS
The Issuer and the Guarantors believe that the following factors may affect their ability to fulfil their
obligations under the Notes issued under the Programme. All of these factors are contingencies which may or
may not occur and neither the Issuer nor the Guarantors are in a position to express a view on the likelihood
of any such contingency occurring.
Factors which the Issuer and the Guarantors believe may be material for the purpose of assessing the market
risks associated with Notes issued under the Programme are also described below. As 50Hertz Offshore
GmbH ("50Hertz Offshore") is subject to many of the regulatory, environmental, legal and business
operational risks to which 50Hertz Transmission GmbH ("50Hertz") is subject, references below to such
risks relating to 50Hertz and its business also apply to 50Hertz Offshore and its business (as described in
"Business Description of 50Hertz Offshore").
The Issuer and the Guarantors believe that the factors described below represent the principal risks inherent
in investing in Notes issued under the Programme. The Issuer or the Guarantors may be unable to pay
interest, principal or other amounts on or in connection with Notes issued under the Programme for other
reasons and the Issuer and the Guarantors do not represent that the statements below regarding the risks of
holding any Notes are exhaustive. Prospective investors should also read the detailed information set out
elsewhere in this Prospectus (including any documents incorporated by reference herein) and reach their own
views prior to making any investment decision. Additional risks and uncertainties, including those currently
unknown, or deemed immaterial, could have the effects set forth above.
Factors that may affect the Issuer's and the Guarantors' ability to fulfil their obligations
under or in connection with Notes issued under the Programme
The Guarantee will be subject to certain limitations on enforcement
Each Guarantor is organised as a limited liability company under German law (Gesellschaft mit beschränkter
Haftung). The enforcement of the Guarantee will therefore be limited by virtue of specific limitation language
in the Guarantee reflecting the requirement under the capital maintenance rules imposed by §§ 30 and 31 of
the German Act regarding companies with limited liability (Gesetz betreffend die Gesellschaften mit
beschränkter Haftung - "GmbH-Act") if and to the extent that payments under the Guarantee would
reduce either Guarantor's net assets (Nettovermögen) to an amount less than its stated share capital
(Stammkapital) or (if its net assets are already lower than its stated share capital) would cause such amount to
be further reduced or if and to the extent payments under the Guarantee would deprive either Guarantor of the
liquidity necessary to fulfil its financial liabilities to its creditors (§ 64, third sentence, GmbH-Act). These
limitations will, to the extent applicable, restrict or entirely exclude the right to receive payment under the
Guarantee. See "Overview of the Programme -- Guarantee".
The Issuer is a holding company with no material operations and relies on its subsidiaries to
provide itself with funds necessary to meet its financial obligations
The Issuer is a holding company with no material, direct operations. The Issuer's principal asset is the equity
interests it holds in 50Hertz. As a result, the Issuer's ability to pay interest on and repay principal of the Notes
and its other indebtedness is dependent upon the operations of its subsidiaries and the distributions, transfers,
advances or other payments of funds the Issuer receives. The Issuer cannot provide any assurance that it will
receive sufficient funds to make payments on the Notes when due. The Issuer's subsidiaries are separate and
distinct legal entities and, except for the Guarantors pursuant to the Guarantee, they will have no obligation,
contingent or otherwise, to pay amounts due under the Notes or to make any funds available to pay those
9


amounts, whether by dividends, distributions, advances, loans or other payments. Accordingly, all risk factors
that have an impact on the Guarantors have an impact on the Issuer.
Factors which are material for the purpose of assessing the regulatory, environmental and
legal risks associated with Notes issued under the Programme
The regulatory framework in Germany governing the tariffs of the Guarantors includes certain
factors which may negatively impact the Issuer's ability to meet its debt service obligations
The tariffs charged by 50Hertz as a Transmission System Operator ("TSO") are subject to regulation by the
German federal regulatory agency, Bundesnetzagentur ("BNetzA"). The decisions made and the actions taken
by the BNetzA under the current regulatory framework may have a negative impact on 50Hertz. In particular,
such decisions or actions may be based on false assumptions, defective research or unreasonable efficiency
goals and may fail to acknowledge costs which 50Hertz cannot avoid incurring. The BNetzA is under no
statutory obligation to ensure the solvency of a TSO in all circumstances and there is no assurance that tariff
limits imposed by the BNetzA will allow 50Hertz to generate sufficient revenues, thereby allowing the Issuer
to meet its financial obligations.
The primary sources of revenue for 50Hertz are (1) revenues generated through the sale of energy fed in from
renewable energy facilities ("EEG-revenues") or from combined heating and electricity generation
("KWKG-revenues"), (2) recovery of costs (the so called "EEG-Umlage" which is regulated by the
BNetzA) arising from its obligations with respect to the renewable energy process as set out in the Renewable
Energy Act of 2009 (Erneuerbare Energien Gesetz 2009 -- "EEG 2009"), and (3) grid tariffs for access to the
50Hertz transmission system. As the impact of EEG-revenues, KWKG-revenues and the EEG-Umlage on
50Hertz's profit is designed to be neutral, 50Hertz primarily derives its profit only from the grid tariffs. These
tariffs are subject to regulation by the BNetzA and are based largely on a cost assessment in a "base" year,
which is used in the calculation of an annual revenue cap for each 5-year regulatory period. The current
regulatory period that came into effect in 2009, based on costs in the base year 2006, will expire in 2013. The
revenue cap and efficiency factors for the next regulatory period, which is expected to come into effect in
2014 based on costs in 2011, are unknown. The ultimate revenue cap for the second regulatory period could
potentially lead to a material drop in profitability of 50Hertz.
Under the incentive regulation mechanism set by the BNetzA, the annual revenue cap is calculated on the
basis of approved costs in a base year (currently 2006), with some costs classified as permanently non-
influenceable costs and others as temporary non-influenceable costs and influenceable costs. For the purposes
of this incentive regulation mechanism, an efficiency factor (currently based on 50Hertz being deemed 99.6
per cent. efficient as of the start of the first regulatory period in 2009) affects the influenceable costs and a
productivity factor (currently 1.25 per cent. for the first regulatory period), together with an inflation factor,
affect the temporary non-influenceable costs and influenceable costs during the 5-year regulatory period. If
the relevant efficiency and productivity factors are not achieved, there may be a negative impact on the
profitability of 50Hertz. Furthermore, the current regulatory framework provides for the use of a "quality
factor" for TSOs but the criteria for the quality factor and its implementation mechanism have yet to be
prescribed by the BNetzA. There will be an additional negative impact on the profitability of 50Hertz if such
quality factor is not met.
A part of the annual revenue cap is based on the recovery of costs associated with 50Hertz's obligations with
respect to energy management (ancillary services, grid losses, and redispatch) that may negatively impact the
profitability of 50Hertz. The main risks involved in the energy business result from cost increases, in
particular with respect to balancing power, procurement of energy volumes to cover grid losses and redispatch
costs. Such cost increases may result from volume effects and/or from unforeseen market price increases. The
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