Obbligazione Eurogrid AG 1.5% ( XS1396285279 ) in EUR

Eurogrid AG

100 EUR ▲

Germania

XS1396285279 ( in EUR )

1.5% per anno ( pagato 1 volta l'anno)

18/04/2028 - Obbligazione è scaduto

Prospetto opuscolo dell'obbligazione Eurogrid GmbH XS1396285279 in EUR 1.5%, scaduta

Eurogrid GmbH è una società tedesca specializzata nella progettazione, costruzione e gestione di infrastrutture per la trasmissione di energia elettrica.

The Obbligazione issued by Eurogrid AG ( Germany ) , in EUR, with the ISIN code XS1396285279, pays a coupon of 1.5% per year.
The coupons are paid 1 time per year and the Obbligazione maturity is 18/04/2028

Base Prospectus
8 April 2016
This document constitutes the base prospectus of Eurogrid GmbH in respect of non-equity securities within
the meaning of Art. 22 No. 6 (4) of the Commission Regulation (EC) No. 809/2004 of 29 April 2004, as
amended, with a denomination of at least EUR 100,000 (or the equivalent in any other currency as at the
relevant date of issuance) (the "Debt Issuance Programme Prospectus" or the "Prospectus").

Eurogrid GmbH

(Berlin, Federal Republic of Germany)
as Issuer
50Hertz Transmission GmbH
(Berlin, Federal Republic of Germany)
and
50Hertz Offshore GmbH
(Berlin, Federal Republic of Germany)
as Guarantors
5,000,000,000
Debt Issuance Programme
(the "Programme")

Application has been made to the Luxembourg Commission de Surveillance du Secteur Financier (the
"CSSF"), which is the Luxembourg competent authority for the purpose of Directive 2003/71/EC as
amended from time to time (the "Prospectus Directive"), for its approval of this Prospectus. By approving
this Prospectus, the CSSF gives no undertaking as to the economic and financial soundness of the
operation or the quality or solvency of the Issuer and/or the Guarantors in line with Article 7(7) of the
Luxembourg act dated 10 July 2005 relating to prospectuses for securities (Loi relative aux prospectus pour
valeurs mobilières), as amended (the "Luxembourg Act").
Application has been made to list notes issued under the Programme (the "Notes") on the official list of the
Luxembourg Stock Exchange and to trade Notes on the regulated market "Bourse de Luxembourg". The
Luxembourg Stock Exchange's regulated market is a regulated market for the purposes of the Market and
the Financial Instruments Directive 2004/39/EC (the "Regulated Market"). Notes issued under the
Programme may also be listed on an alternative stock exchange or may not be listed at all.
Arrangers and Dealers
BNP PARIBAS
COMMERZBANK AKTIENGESELLSCHAFT
HELABA
ING
MUFG
RABOBANK
THE ROYAL BANK OF SCOTLAND
UNICREDIT BANK
This Prospectus will be published in electronic form on the website of the Luxembourg Stock Exchange
(www.bourse.lu) as well as on the website of Eurogrid GmbH (www.eurogrid.com). This Prospectus

replaces the Prospectus dated 13 May 2015 as supplemented by Supplement No. 1 dated 23 October 2015
pertaining to the Programme. This Prospectus is valid for a period of twelve months from the date of its
approval.

RESPONSIBILITY STATEMENT
Eurogrid GmbH ("Eurogrid" or the "Issuer", together with all consolidated subsidiaries, the "Group") with its
registered office in Berlin, Federal Republic of Germany, and 50Hertz Transmission GmbH and 50Hertz
Offshore GmbH (each a "Guarantor" and together the "Guarantors"), each with its registered office in
Berlin, Federal Republic of Germany and in respect of information on itself only, accept responsibility for the
information given in this Prospectus.
The Issuer and each Guarantor hereby declares that, having taken all reasonable care to ensure that such is
the case, the information contained in this Prospectus for which it is responsible is, to the best of its
knowledge, in accordance with the facts and contains no omission likely to affect its import.
This Prospectus should be read and understood in conjunction with any supplement hereto and with any
other documents incorporated herein by reference and, in relation to any series of Notes, together with the
relevant final terms (the "Final Terms"). Full information on any tranche of Notes is only available on the
basis of the combination of the Prospectus and the relevant Final Terms.

NOTICE
The Issuer and each Guarantor with regard to information for which it is responsible has confirmed to the
Dealers (as defined herein) that this Prospectus contains all information with regard to the Issuer, the
Guarantors and the Notes which is material in the context of the Programme and the issue and offering of
Notes thereunder; that the information contained herein with respect to the Issuer, the Guarantors and the
Notes is accurate and complete in all material respects and is not misleading; that any opinions and
intentions expressed herein are honestly held and based on reasonable assumptions; that there are no
other facts with respect to the Issuer, the Guarantors or the Notes, the omission of which would make this
Prospectus as a whole or any of such information or the expression of any such opinions or intentions
misleading; that the Issuer and the Guarantors have made all reasonable enquiries to ascertain all facts
material for the purposes aforesaid.
This Prospectus is valid for 12 months following the date of its approval and this Prospectus and any
supplement hereto as well as any Final Terms reflect the status as of their respective dates of issue. The
delivery of this Prospectus, any supplement thereto, or any Final Terms and the offering, sale or delivery of
any Notes may not be taken as an implication that the information contained in such documents is accurate
and complete subsequent to their respective dates of issue or that there has been no adverse change in the
financial situation of the Issuer or the Guarantors since such date or that any other information supplied in
connection with the Programme is accurate at any time subsequent to the date on which it is supplied or, if
different, the date indicated in the document containing the same.
The Issuer has undertaken with the Dealers to supplement this Prospectus in accordance with Article 13 of
the Luxembourg Act or publish a new Prospectus in the event of any significant new factor, material mistake
or inaccuracy relating to the information included in this Prospectus in respect of Notes issued on the basis
of this Prospectus which is capable of affecting the assessment of the Notes and which arises or is noted
between the time when this Prospectus has been approved and the closing of any tranche of Notes offered
to the public or, as the case may be, when trading of any tranche of Notes on a regulated market begins in
respect of Notes issued on the basis of this Prospectus.
No person has been authorised to give any information which is not contained in or not consistent with this
Prospectus or any other document entered into in relation to the Programme or any information supplied by
the Issuer or any other information in the public domain and, if given or made, such information must not be
relied upon as having been authorised by the Issuer, the Dealers or any of them.

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Neither any Arranger nor any Dealer nor any other person mentioned in this Prospectus, excluding the
Issuer and the Guarantors, is responsible for the information contained in this Prospectus or any supplement
hereto, or any Final Terms or any document incorporated herein by reference, and accordingly, and to the
extent permitted by the laws of any relevant jurisdiction, none of these persons accepts any responsibility for
the accuracy and completeness of the information contained in any of these documents.
The distribution of this Prospectus, any supplement thereto and any Final Terms and the offering, sale and
delivery of Notes in certain jurisdictions may be restricted by law. Persons into whose possession this
Prospectus or any Final Terms come are required to inform themselves about and observe any such
restrictions. For a description of the restrictions applicable in the United States of America, the United
Kingdom, Luxembourg and Japan; see "Selling Restrictions". In particular, 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 tax law requirements of the United States of America;
subject to certain exceptions, Notes may not be offered, sold or delivered within the United States of
America or to United States persons.
The language of this Prospectus, the Terms and Conditions and the Guarantee is English.
This Prospectus may only be used for the purpose for which it has been published.
This Prospectus and any Final Terms may not be used for the purpose of an offer or solicitation by
anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to
whom it is unlawful to make such an offer or solicitation.
This Prospectus, any supplement thereto and any Final Terms do not constitute an offer or an
invitation to subscribe for or purchase any Notes.
In connection with the issue of any Tranche of Notes under the Programme, the Dealer or Dealers (if
any) named as stabilising manager(s) in the applicable Final Terms (or persons acting on behalf of a
stabilising manager) may over-allot Notes or effect transactions with a view to supporting the price
of the Notes at a level higher than that which might otherwise prevail. However, there is no
assurance that such stabilising manager(s) (or persons acting on behalf of a stabilising manager)
will undertake stabilisation action. Any stabilisation action may begin at any time after the adequate
public disclosure of the terms of the offer of the relevant Tranche of the Notes 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 of Notes and 60 days after the date of the allotment of the relevant Tranche of
Notes. Any stabilisation action or over-allotment must be conducted by the relevant stabilising
manager(s) (or person(s) acting on behalf of any stabilising manager(s)) in accordance with all
applicable laws and rules.
In this Prospectus, all references to "", "EUR" or "Euro" are to the currency introduced at the start of the
third stage of the European economic and monetary union, and defined in Article 2 of Council Regulation
(EC) No 974/98 of 3 May 1998 on the introduction of the Euro, as amended.
Tranches of Notes may be rated or unrated. Where a Tranche of Notes is rated, such rating and the
respective rating agency will be specified in the relevant Final Terms. A rating is not a recommendation to
buy, sell or hold Notes and may be subject to suspension, reduction or withdrawal at any time by the
assigning rating agency.
To the extent not otherwise indicated, the information contained in this Prospectus on the market
environment, market developments, growth rates, market trends and competition in the markets in which the
Issuer or the Guarantors operate is taken from publicly available sources, including, but not limited to, third-
party studies or the Issuer's or the Guarantors' estimates that are also primarily based on data or figures
from publicly available sources. The information from third-party sources that is cited here has been
reproduced accurately. As far as the Issuer is aware and able to ascertain from information published by

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such third-party, no facts have been omitted which would render the reproduced information published
inaccurate or misleading.
This Prospectus also contains estimates of market data and information derived from these estimates that
would not be available from publications issued by market research firms or from any other independent
sources. This information is based on the Issuer's or the Guarantors' internal estimates and, as such, may
differ from the estimates made by their competitors or from data collected in the future by market research
firms or other independent sources. To the extent the Issuer derived or summarized the market information
contained in this Prospectus from a number of different studies, an individual study is not cited unless the
respective information can be taken from it directly.
The Issuer and the Guarantors have not independently verified the market data and other information on
which third parties have based their studies or the external sources on which the Issuer's own estimates are
based. Therefore, the Issuer and the Guarantors assume no responsibility for the accuracy of the
information on the market environment, market developments, growth rates, market trends and competitive
situation presented in this Prospectus from third-party studies or the accuracy of the information on which
the Issuer's and the Guarantors' own estimates are based. Any statements regarding the market
environment, market developments, growth rates, market trends and competitive situation presented in this
Prospectus regarding the Issuer, the Guarantors and their operating divisions contained in this Prospectus
are based on their own estimates and/or analysis unless other sources are specified.

Any websites referred to in this Prospectus are for information purposes only and do not form part of the
Prospectus (except with respect to the documents incorporated by reference into this Prospectus).

FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements. A forward-looking statement is a statement
that does not relate to historical facts and events. They are based on analyses or forecasts of future results
and estimates of amounts not yet determinable or foreseeable. These forward-looking statements are
identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect",
"intend", "may", "plan", "predict", "project", "will" and similar terms and phrases, including references and
assumptions. This applies, in particular, to statements in this Prospectus containing information on future
earning capacity, plans and expectations regarding Eurogrid's and the Guarantors' business and
management, their growth and profitability, and general economic and regulatory conditions and other
factors that affect them.
Forward-looking statements in this Prospectus are based on current estimates and assumptions that the
Issuer and the Guarantors make to the best of their present knowledge. These forward-looking statements
are subject to risks, uncertainties and other factors which could cause actual results, including the Issuer's
and the Guarantors' financial condition and results of operations, to differ materially from and be worse than
results that have expressly or implicitly been assumed or described in these forward-looking statements.
The Issuer's and the Guarantors' business is also subject to a number of risks and uncertainties that could
cause a forward-looking statement, estimate or prediction in this Prospectus to become inaccurate.
Accordingly, investors are strongly advised to read the following sections of this Prospectus: "Risk Factors",
"Business Description of the Issuer" and "Business Description of the Guarantors". These sections include
more detailed descriptions of factors that might have an impact on the Issuer's and the Guarantors' business
and the markets in which they operate.
In light of these risks, uncertainties and assumptions, future events described in this Prospectus may not
occur. In addition, neither the Issuer nor the Guarantors nor the Dealers assume any obligation, except as
required by law, to update any forward-looking statement or to conform these forward-looking statements to
actual events or developments.

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TABLE OF CONTENTS
Page
RESPONSIBILITY STATEMENT ............................................................................................................... 2
NOTICE ...................................................................................................................................................... 2
FORWARD-LOOKING STATEMENTS....................................................................................................... 4
RISK FACTORS .......................................................................................................................................... 6
OVERVIEW OF THE PROGRAMME ....................................................................................................... 21
BUSINESS DESCRIPTION OF THE ISSUER ........................................................................................... 25
BUSINESS DESCRIPTION OF THE GUARANTORS 50HERTZ TRANSMISSION GMBH ................. 30
BUSINESS DESCRIPTION OF THE GUARANTORS 50HERTZ OFFSHORE GMBH .......................... 46
GENERAL DESCRIPTION OF THE PROGRAMME ................................................................................ 50
TERMS AND CONDITIONS OF THE NOTES ......................................................................................... 52
FORM OF FINAL TERMS ........................................................................................................................ 88
GUARANTEE AND NEGATIVE PLEDGE ("GUARANTEE") ................................................................. 96
USE OF PROCEEDS ............................................................................................................................... 103
TAXATION ............................................................................................................................................. 104
SUBSCRIPTION AND SALE .................................................................................................................. 110
GENERAL INFORMATION .................................................................................................................... 114
DOCUMENTS INCORPORATED BY REFERENCE .............................................................................. 116
NAMES AND ADDRESSES.................................................................................................................... 119

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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 and under the Guarantee. 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. Many of the regulatory,
environmental, legal and business operational risks to which 50Hertz Transmission GmbH ("50Hertz") is subject
may, due to the group structure and contractual obligations between 50Hertz and 50Hertz Offshore GmbH
("50Hertz Offshore"), also have an impact on 50Hertz Offshore. Accordingly, 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 the Guarantors - 50Hertz Offshore GmbH").
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.
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 Sections 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 a 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 (Vertiefung einer
Unterbilanz) 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 (Sec. 64, third sentence, GmbH-Act). These limitations will,
to the extent applicable, restrict or entirely exclude the right to receive payments under the Guarantee.
German capital maintenance rules are subject to ongoing court decisions. There is no assurance that future court
rulings may not further limit the access of shareholders to assets of its subsidiaries constituted in the form of a
limited liability company which can negatively affect the ability of the Guarantors to make payments on the
Guarantee or of the beneficiaries of the Guarantee to enforce the Guarantee.
Enforcement of Guarantee
The Guarantee in respect of the Notes will constitute a contract for the benefit of the Holders as third party
beneficiaries in accordance with Sec. 328(1) of the German Civil Code (BGB). As a consequence, each Holder will
have the right to demand payment directly from the Guarantor under the Guarantee and to enforce the Guarantee
directly against the Guarantor.
The Guarantee will be governed by German law and the courts of Frankfurt am Main, Germany, will have non-
exclusive jurisdiction for any action or other legal proceedings in connection with the Guarantee. Holders should be
aware that the enforcement of rights with the help of a German court is subject to an advance of court fees and, if

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the relevant Holder is a foreign person domiciled outside the European Union, to the posting of a bond for statutory
attorney's fees incurred by the defendant. In addition, upon request of the court, documents which are not in the
German language will have to be translated into German to be admissible evidence in the German courts which
could cause delays in the enforcement of the Holder's rights.
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
interest 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 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 50Hertz 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
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. 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 BNetzA
will allow 50Hertz to generate sufficient revenues, thereby allowing the Issuer to meet its financial obligations.
The primary source of revenues for 50Hertz are (1) grid tariffs for access to and usage of the 50Hertz transmission
system, and (2) several surcharges (Umlagen) such as (i) the surcharge for the recovery of EEG costs (the so
called "EEG-Umlage") arising from 50Hertz's obligations with respect to the renewable energy process as set out
in the Renewable Energy Act (Erneuerbare Energien Gesetz "EEG") and the Ordinance on the Equalisation
Mechanism (Ausgleichsmechanismus-Verordnung "AusglMechV"), (ii) the surcharge according to Sec. 19
Ordinance on Electricity Network tariffs 2005 (Verordnung über die Entgelte für den Zugang zu
Elektrizitätsversorgungsnetzen (Stromnetzentgeltverordnung "StromNEV")) for so called individual grid tariffs, (iii)
the surcharge for recovery of costs incurred in connection with offshore connections according to Sec. 17f of the
Energy Industry Act (Energiewirtschaftsgesetz, "EnWG") (so called "Offshore-Haftungsumlage", "Offshore
Liability Surcharge"), (iv) the surcharge for the recovery of costs incurred by 50Hertz due to obligations arising
from the Combined Heat and Power Act (Kraftwärmekopplungsgesetz, "KWKG") (so called "KWKG-Umlage") and
(v) the surcharge for recovery of costs arising from 50Hertz's obligations with respect to the Ordinance on
Detachable Load (Verordnung über Vereinbarungen zu abschaltbaren Lasten, "AbLaV"). As the impact of the
aforementioned surcharges under (2) on 50Hertz's profit is designed to be neutral, 50Hertz primarily derives its
profit from the grid tariffs.
The grid tariffs are calculated on the basis of a revenue cap, which is subject to regulation by BNetzA. The revenue
cap is determined for each year of a 5-year regulatory period based upon a cost assessment in a "base" year. This
cost assessment reviews cost items for the operation of both onshore and offshore assets. The current, second
regulatory period came into effect in 2014, based on approved costs of the base year 2011 and will expire in 2018.

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BNetzA classified some costs as permanently non-influenceable costs (as regards 50Hertz currently more than 50
percent. of the costs), others as temporarily non-influenceable costs and influenceable costs. For the purposes of
this incentive regulation mechanism, an efficiency factor (currently 50Hertz is deemed 100 per cent. efficient for the
second regulatory period) affects the influenceable costs and a productivity factor (currently 1.5 per cent. for the
second regulatory period), together with an inflation factor, affect the temporary non-influenceable costs and the
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. Before the third regulatory period
commences in 2019 another efficiency comparison will be carried out and the productivity factor will be newly
determined. There is a risk that 50Hertz will no longer be considered 100% efficient and that the new productivity
factor is not in line with 50Hertz's individual productivity. Furthermore, the current regulatory framework provides for
the use of a "quality factor" which could also be applied to TSOs but the criteria for the quality factor for TSOs and
its implementation mechanism have yet to be established by BNetzA. There may be an additional negative impact
on the profitability of 50Hertz if the relevant quality standards are not met. Furthermore, there is a risk that neither
the base year costs itself nor the results of the costs assessment of the applied costs give a sufficient base for the
cost coverage in the following regulatory period.
A part of the annual revenue cap is based on the recovery of costs associated with 50Hertz's obligations with
respect to energy management (control power, grid losses, reserves, redispatch) that may negatively impact the
profitability of 50Hertz and/or may lead to a liquidity risk of 50Hertz. The main risks involved in the energy
management business result from cost increases, in particular with respect to control power, reserves,
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, such as price increases resulting from higher
volumes since in case of higher volumes also energy from more expensive power plants has to be procured, and
such cost increases may be substantial. The volume effects may be enhanced by the fluctuating feed-in from
renewable energy facilities, which need to be compensated for by maintaining a system balance between
generation and consumption at all times. In order to reduce the risks arising from these effects for the second
regulatory period BNetzA has accepted separate procedural regulations (so called "Freiwillige Selbstverpflichtung"
acc. to Sec. 11 para. 2 Ordinance on Incentive Regulation Anreizregulierungsverordnung, "ARegV") for each
energy management obligation (control power, grid losses, national redispatch). Regarding reserves no such
procedural regulations are in place yet. According to the procedural regulations the expenses for each energy
management obligation will be reflected in the revenue cap on the basis of planned costs. Afterwards, in the
following year, planned costs will be compared to actual costs. According to the respective regulation for redispatch
the difference between planned costs and actual costs will be completely accepted in the revenue cap with a 2-
years-delay. For offshore grid losses the difference between planned costs and actual costs will be accumulated
during a regulatory period. The total cost differences over this regulatory period will be equally distributed over the
costs for offshore grid losses over all years of the following regulatory period, thus increasing or decreasing the
revenue cap of each of the respective years. However, if allowed total grid revenues during one of the years of the
regulatory period in which the offshore grid losses initially occur deviate from the revenue cap by more than 5 %,
the difference between planned costs and actual costs for the compensation of offshore grid losses will be
completely accepted in the revenue cap with a 2-years-delay from that said year. The time lag will be compensated
for by an interest rate according to the regulatory account. This interest rate might substantially deviate from
50Hertz's real options of placing funds and borrowing money. Especially, in case of actual costs being below
planned costs 50Hertz might not be able to earn the interest rate (from the regulatory account payable to grid
users) by placing funds. However, as regards the procedural regulation for redispatch, there is a risk that BNetzA
does not accept costs in the framework of the procedural regulation. Inter alia, BNetzA on 19 August 2015 waived
a legal basis (namely the definition of reasonable compensation for redispatch) for the procedural regulation
redispatch. If BNetzA does not accept certain costs as being part of the redispatch costs this would increase the
liquidity and/or profitability risks originally meant to be reduced by the procedural regulation redispatch. For
onshore grid losses the difference between planned costs and actual costs will be partially accepted in the revenue
cap with a 2-years-delay; (real volumes are accepted, but prices are limited to a reference price). For control power

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the actual prices are fully accepted, whereas the costs resulting from volume differences are subject to a
bonus/malus.
Apart from that, three further procedural regulations exist: one for the recognition of auction revenues and cross-
border redispatch costs one for costs arising from European activities and one for the revenues from the Inter-
Transmission System Operator Compensation ("ITC"). The first two procedural regulations cover real costs,
nevertheless, due to time lags liquidity risks may arise. The latter one on ITC currently only covers revenues. If
50Hertz becomes an ITC net payer a new procedural regulation covering real costs has to be concluded.
It has, however, to be noted that the acceptance of procedural regulations which represent an administrative act
may be revoked by BNetzA in accordance with general principles of administrative law. Besides that all procedural
regulations are limited to the duration of the regulatory period and may change for the next regulatory period with a
potentially serious impact on 50Hertz's business.
German regulation provides for a specific remuneration regime for transmission network investments called
investment measures ("IM"). If an expansion or restructuring measure is approved as an IM, the costs incurred for
such an IM are generally considered as permanently non-influenceable costs for the approved period without time
delay (Sec. 23 ARegV). After the approved period the costs resulting from the respective IM will become a part of
the regulated asset base. Investment projects with an overall volume of approximately 6.25 billion (reference
date: 31 January 2016) contemplated by 50Hertz are currently approved; further projects are still in the approval
phase. With regard to the projects in the approval phase there is the risk that BNetzA does not acknowledge the
need for the investment as such and, in consequence thereof, does not (entirely) approve the IM. With regard to
IMs there is the risk that BNetzA does not acknowledge all costs incurred. In particular, in cases where investment
measures are not realized, the inclusion of the costs accrued in relation to such investment measures in the tariffs
is only potentially acknowledged by BNetzA. Thus, in such an event a case by case evaluation would be carried out
by BNetzA. This can also apply in cases where underlying costs result from contracts between 50Hertz and foreign
parties such as foreign TSOs or suppliers according to which payments are to be made in another currency than
Euro (currency risk).
BNetzA has issued a self-binding determination with regard to the calculation of capital cost and cost of operation
for approved IM. According to this determination actual costs of debt are accepted as long as they are market
conform. This has to be proven by the network operator. The determination contains reference values to match the
market conformity for the different options of financing. If cost of debt exceed the reference values and the market
conformity is not proven by the network operator, costs of debt will not be completely accepted for the IM while the
allowed cost of debt related to IM is capped at the lower of the actual cost of debt or cost of debt as calculated in
accordance with a published BNetzA determination. These caps can result in 50Hertz only partially recovering its
actual cost of debt, which may negatively impact the financial results of 50Hertz. In addition, the determination can
be revoked or amended by BNetzA.
If financings and investments are not aligned, a risk for the profit and hence liquidity might arise.
In general, operational costs linked to IMs are recognised by BNetzA at a rate of 0.8 per cent. on approved actual
investment volume (cf. Sec. 23 para. 1 s. 3, 4 ARegV). A specific rate of currently 3.4 per cent. on approved actual
investment volume applies to operational costs linked to offshore connections (cf. BNetzA, determination of 12
December 2011, BK4-11-026). However, this determination on accepted operational costs linked to offshore
connections can be revoked or amended by BNetzA due to a different calculation approach.
The operational costs recognised by BNetzA may not be sufficient to cover actual operational costs and BNetzA
may utilise a different approach in the future. Consequently, operational costs may not be fully recovered.
The revenue cap and efficiency factors for the next regulatory period, which is expected to come into effect in 2019
based on costs in 2016, are unknown. BNetzA has submitted an evaluation report to the German Federal Ministry
for Economic Affairs and Energy containing an evaluation of the incentive regulation and proposals for further
developing it. However, at this stage of the process it is unclear, whether and how these proposals will be

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implemented into the current incentive regulation. Due to the base rate development, the equity remuneration is
expected to decline in the third regulatory period. Additionally, according to Sec. 9 para. 3 ARegV, BNetzA has to
determine the general productivity factor for the third regulatory period. At this stage it is still unclear which method
will be adopted by BNetzA and which general productivity factor will result from this. The determination will have an
impact on the revenue cap of 50Hertz. The ultimate revenue cap for the third regulatory period could potentially
lead to a material drop in profitability of 50Hertz.
According to Sec. 19 StromNEV, in specific cases, grid users can apply for so-called individual grid tariffs which
are, compared to the standard grid tariffs, lower and take into account that particularly huge industrial grid users
contribute to a permanent and steady usage of the network system. The TSOs are obligated to reimburse
distribution system operators ("DSO") for loss of income resulting from such lower individual grid tariffs. The TSOs
then balance their respective compensation payments towards DSOs and their own loss of income amongst each
other according to a specific distribution key. The financial burden is then to be allocated to all end consumers by
means of a surcharge. In pending court proceedings the legitimacy of the surcharge and of individual grid tariff
exemptions is challenged. With regard to both, the surcharge and individual grid tariffs, a state aid proceeding in
front of the European Commission is also pending. There is a risk that the pending proceedings could lead to a
change in the surcharge mechanism for the years 2011-2013 and therefore temporarily lead to liquidity and
profitability risks for 50Hertz.
The TEN-E Regulation (EU Regulation No 347/2013 on guidelines for Trans-European energy infrastructure) has
been in force since June 2013. The TEN-E Regulation was passed in order to achieve the EU's energy policy
objectives. To ensure these joint European objectives, most energy infrastructure network expansion projects
affecting cross border capacity that were already identified as necessary at the national level are designated as
projects of common interest ("PCIs"). For projects classified as PCI TSOs can claim European cost sharing to other
TSOs if their countries profit from those projects. Lithuania has claimed cost sharing for one of their projects with
impact on Germany. Since national regulators did not agree on cost sharing it was up to the Agency for the
Cooperation of Energy Regulators ("ACER") to decide on this case. ACER decided against the claim, so that
Germany and thus the German TSOs do not have to bear any costs. However there is a risk that ACER may
decide differently in future cases. Then the German TSOs have to bear a certain share of costs and a risk for the
exact cost coverage arises for 50Hertz. National legislation currently does not specifically reflect a cost coverage
mechanism without a time lag. This could temporarily lead to liquidity and profitability risks.
Insufficient return on the capital invested represents a financial risk with respect to both investments
already made and future investments
The return on equity is determined by an imputed equity and a specific interest rate on this equity. Every 5 years,
prior to the respective base year, BNetzA determines the interest rate and thereby the equity remuneration for the
following regulatory period. The interest rate consists of a risk-free base rate and a risk premium. So far BNetzA
has used a Capital Asset Pricing Model (CAPM) in order to calculate the equity remuneration. The return on equity
for the current, second regulatory period is set at 9.05 per cent. for investments made since 2006 and 7.14 per
cent. for investments made before 2006 ("Interest Rate EK I"). The aforementioned percentages are calculated
before corporate tax and after imputed trade tax. The equity to which the Interest Rate EK I applies is limited to 40
per cent. of the value of the regulated asset base. If the value of the regulated asset base financed by equity
exceeds 40 per cent., an interest rate fixed in the StromNEV is applicable ("Interest Rate EK II"). An insufficient
return on equity may result if the interest rates are too low or if BNetzA does not recognize all balance sheet items
in the calculation of the regulated asset base. The interest rate for the following third regulatory period is expected
to be determined by BNetzA in late summer 2016. Following the development of the variables in the calculation
formula, such as general interest level, and the recommendations of several studies carried out in some of the
neighbouring countries, a decrease of the interest rate compared to the current, second regulatory period has to be
expected. Even though, discussions on an adequate consideration of the specific framework conditions in Germany
in the light of the "Energiewende" and an interest rate that allows grid companies to finance the necessary
investments will continue during the next months it remains totally unclear whether or not such discussions will

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