10 November 2009 - German utility E.ON has sold its domestic long-distance power grid to the Netherlands' state-owned grid operator TenneT for EUR1bn ($1.5bn).
According to Reuters, E.ON has agreed to sell 10 700 km of high-voltage power lines to TenneT with effect from January 1. E.ON declined to comment.
TenneT, which runs 3500 kms of high-voltage grid in the Netherlands, also declined to comment specifically on any deal, but said it wanted to create a northwest European power market and was working with power exchanges and other grid operators to that end.
E.ON will be giving up large parts of its regulated business, which has its profits overseen by a state agency and does not rely on volatile energy markets.
It will be the first time that anything other than a local utility will operate a high-voltage grid in Europe's largest power market. The deal would make sense for TenneT, helping it to expand its core business of running grids, and allowing it to benefit from economies of scale, said a Dutch utilities banker who did not wish to be named.
E.ON had always said the grid was a vital part of its business until it decided last year to sell it in the face of ever-stricter regulation, declining profit margins and pressure from the European Commission.
Utilities throughout Europe, including RWE and EDF are selling power and gas grids to shed assets burdened by strict regulatory regimes and to invest money in more profitable ventures.