DTe Removes Competitive Disadvantage of Dutch Electricity Producers

The Office for Energy Regulation (DTe) has decided to set the National Uniform Producers Tariff [Landelijk Uniform Producenten transporttarief (LUP)] at nil as of 1 July 2004.

At present Dutch electricity producers experience a competitive disadvantage because they contribute through the LUP to the cost of the Dutch high-voltage grid. Producers from neighbouring countries do not have such a transmission tariff for producers. To create a level playing field for electricity producers within Europe and to promote trade on the electricity market, DTe has decide under the present market conditions to set the LUP at nil.

Through the LUP 25 percent of the cost of the high-voltage network (with a voltage of 110 kV and above) is passed on to the large-skill electricity producers which feed electricity into the high-voltage grid. The producers include cost of the LUP in their electricity prices. The remaining 75 percent of the cost of the high-voltage grid is paid by end-users through the transmission tariffs.

The LUP was introduced in 2000 on the assumption that ultimately all EU Member States would introduce a similar tariff. Since then it has appeared that the majority of Member States (including Belgium, France and Germany, countries with which the Netherlands conducts most of its electricity trade) have not introduced a substantial transmission tariff for producers. Dutch electricity producers experience a competitive disadvantage as a result compared to foreign producers and a limited in their export opportunities. By setting the LUP at nil, this competitive disadvantage is removed. DTe's aim in doing so is to promote the operation of market forces and competition on the European electricity market.