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Willingness to invest in energy networks

Developments are currently taking place that ask more and more of energy networks. Think of the transition to sustainable energy.

ACM’s role

ACM wishes that efficient and optimal investments are made in energy networks. In the energy market, ACM requires network operators to ensure their energy networks are secure at an affordable price for consumers. Our interventions thus influence the investment decisions of network operators.

Results of the online consultation

For six weeks, ACM put five provocative statements and questions online. The goal was to find out what obstacles to investments in energy networks market parties are faced with, and what ACM could do to remove these obstacles. Many participants have responded, including network operators and buyers (and buyer organizations). The online discussion also drew a lot of comments that do not directly concern ACM’s work such as the energy tax.

Obstacles and priorities with regard to investments in energy networks

Network operators indicated that, generally speaking, there are no obstacles to investments. However, they see obstacles to investments that anticipate potential developments (‘anticipatory investments’). They also said they faced uncertainty about their expected returns, due to ACM’s regulatory system. ACM should do more to stimulate innovation. Other participants envisage a larger role for ACM in the energy market than it currently has (statutorily), for example by assessing whether the transition to sustainable energy is progressing efficiently.

In 2014/2015, the first preparatory activities will be launched for the method decisions for 2017 and beyond. Based on the reactions from the consultation, ACM will once again devote attention to the theme of investments, and will start a dialog about this topic with the industry at an early stage. We plan to organize a meeting about this theme in the fall of 2014 in order to sit down with the parties involved about the desired adjustments to the regulatory framework.

In the context of sustainability in energy regulation, ACM has published a vision document. It explains that, among other things, ACM does have a role when it comes to assessments of the efficiency of investments, but that ACM does not have any specific task to determine how the transition to sustainable energy should take place.

Network quality

The questions on what people thought of network quality drew mixed responses. Several parties (which included both network operators and buyers) indicated that quality should be viewed more broadly than power availability alone. It should also include the ability to transport self-generated power freely, connecting wind farms in a timely manner, or the quality of solar power inverters. In addition, it should also be possible to have different quality levels for different types of buyers, so that, for example, a business park has fewer disruptions than does a residential area. A very specific comment came from a network operator, which argued that operators should get bonuses for good quality instead of just giving compensations in case of extended disruptions.

In 2014/2015, ACM will actively support the Ministry of Economic Affairs with the legislative process called STROOM, which will result in a revision of the Dutch Electricity Act and the Dutch Gas Act.

Specific questions about European developments

Responding to specific questions about European developments, several participants said that ACM should also take into account social welfare when assessing investments, for example, using a social cost-benefit analysis (CBA).

Another participant argued that ACM should take into account the cross-border effects in its assessments of investments, but wondered whether a CBA is the right instrument (because of the question of how benefits should be defined). This participant also suggested that the CBA-discussion should be continued under the direction of ACM and/or the Ministry of Economic Affairs, and saw a role for universities because of their independent and academic expertise. He additionally pointed to the increasing risk of depreciation periods not being in line with the economic life of the infrastructure.

Finally, one participant was of the opinion that the assessment of cross-border investments should fall under the jurisdiction of the European Commission (and major national investments under that of the Ministry of Economic Affairs), and not under that of the national regulator. This participant also said that, in general, investments nowadays are much more complicated than before, and that network operators must have the assurance that efficient costs of investments can be recovered in order to ensure that investments do take place.

In 2014/2015, ACM will further determine its position in the European debate on the assessment of cross-border investments, based on, among other things, the concrete suggestions that were made. The specific call for reviewing the depreciation periods will be taken into consideration in the preparations of the method decisions for 2017 and beyond, which will be launched in 2014/2015.