Provisions for Decommissioning and Dismantling of Gas Networks – a comparison of regulatory and commercial law

published on 1 October 2025 | Reading time approx. 2 minutes

On June 18, 2025, the Federal Network Agency published the draft regulation on the regulatory framework and incentive regulation method for gas distribution and transmission network operators (“RAMEN Gas”) for consultation. The draft provides that costs for provisions in connection with the decommissioning and unavoidable dismantling of gas networks may in future be taken into account as non-efficiency-related costs in the network fee calculation. The specific requirements for this are to be regulated in a separate provision.

Regulatory and commercial law differences

In its statement to the Federal Network Agency dated July 25, 2025, the Institute of Public Auditors in Germany (IDW) points out possible discrepancies between the regulatory and commercial treatment of such provisions and the resulting financing problems that may arise. In accounting terms, provisions for uncertain liabilities must generally be made to cover the obligation to decommission and, if necessary, dismantle identified network components. Under commercial law, provisions must be made as soon as an external obligation exists and there is a serious likelihood that it will be claimed. Despite existing decommissioning obligations (external obligations), provisions have often not been created in the past because the gas industry assumed that gas supplies would be permanent and that the network would continue to be expanded (“perpetuity assumption”). In view of the climate targets for 2045, the previous “perpetuity assumption” for gas supplies is now considered obsolete. On the reporting date, the accountant must assess on a case-by-case basis whether a claim arising from decommissioning obligations is seriously to be expected. In doing so, possible obligations of tolerance on the part of the property owners, which exclude a claim against the gas network operator, must also be taken into account.

Regulatory requirements, on the other hand, stipulate additional conditions for the recognition of provisions in the draft “RAMEN Gas” regulation, such as concrete evidence that property owners are actually demanding decommissioning. These requirements go beyond what is required under commercial law. Furthermore, the commercial law valuation will be carried out independently of the regulatory requirements. Against this background, it cannot currently be ruled out that provisions for decommissioning and dismantling costs will in future have to be recognized and measured earlier in the commercial financial statements and differently from the regulated network fee calculation.

Conclusion

In its statement, the IDW points out the urgency of legally establishing an obligation to tolerate decommissioned pipelines. In this case, dismantling obligations would only have to be established for individual cases in which it is unreasonable to leave the pipelines in the ground. Without legal clarification on the obligation to tolerate, there is a risk of uncertainty in accounting treatment and potential financing gaps for gas network operators. Early and consistent coordination between regulatory requirements and commercial law requirements is essential and urgently needed. Against this background, affected companies and their advisors should monitor regulatory developments closely and at an early stage in order to analyze possible accounting implications in good time.