NMa sets solid method for investments by Dutch transmission grid operator TenneT

The Netherlands Competition Authority (NMa) will give more room to TenneT, the operator of the national transmission grid, for making investments in the national high-voltage grid. The investments that TenneT will be making in the Dutch grid are expected to have an upward effect on tariffs in the next few years. Jaap de Keijzer, member of the Board of the NMa and responsible for energy affairs, explains: 'Through their energy bills, businesses and consumers pay for the investments TenneT makes. Yet those same investments also benefit all energy consumers in the Netherlands.'

TenneT will be improving and upgrading the high-voltage grid in anticipation of, for example, new power plants that will be connected to the grid, and of large-scale renewable energy sources, such as wind farms in the North Sea. The investments will help prevent congestion on the grid, and will help TenneT be better prepared for the developments on the European energy market.



Efficient costs are allowed, actual costs are not

The NMa has adjusted the rules in such a way that, when determining TenneT's revenues, it becomes easier to take into account future investments. The NMa has thus helped create a more stable climate for large-scale investments in electricity infrastructure. At the same time, the NMa believes that TenneT's consumers should not unnecessarily be paying too much. TenneT is therefore allowed to recoup only the efficient costs, not the actual costs. That way, TenneT has to make every effort to organize its operational processes as efficiently as possible. In addition, the Board takes into account that inefficiencies resulting from past investments can be gradually reduced. In order to further stimulate efficiency, the NMa has created a financial incentive regarding purchasing costs to, among things, compensate net losses, and to maintain a healthy balance sheet.



Tariffs in the period of 2011-2013

The NMa sets up a standard method (method decision) every three years, and by doing so determines how transmission and system tariffs are set. It then annually caps these services' tariffs. The NMa has issued new method decisions for national transmission grid operator TenneT for the period of 2011-2013. Based on these methods, TenneT will be making a tariff proposal for 2011 this fall. The exact tariffs will be determined then as well.