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ACM: allow network companies to provide heat under certain conditions

26-03-2020

Network companies may produce, distribute, and supply heat, only under certain conditions. In that way, they must safeguard the independent position of the distribution system operator within their company. They must also limit the financial risks for the system operation, and prevent the distribution system operator and business units from giving preferential treatment to each other. These are some of the recommendations that the Netherlands Authority for Consumers and Markets (ACM) has given to the Dutch Minister of Economic Affairs and Climate Policy (EZK) regarding the organization of the heat market. The Minister had asked ACM for advice, since he is preparing a new Heat Act.

Having a level playing field

In its recommendations, ACM also draws attention to the importance of having a level playing field on the heat market. Market participants in private ownership must also be given a fair chance on that market, besides market participants that are owned by provinces and municipalities. This will lead to innovations and more competitive prices, especially in the long term. A prerequisite for such a level playing field is that the process that municipalities use to designate heat companies must be transparent and objective. Oversight over such a process should not lie with the municipalities and provinces themselves. After all, they could also have an interest as they are shareholders in the network companies. ACM points out the option of introducing a form of independent oversight.

Additional oversight

In its recommendations, ACM also says that additional oversight is needed if network companies are going to produce, distribute, and supply heat, because of the conditions that have been attached to such activities. As a consequence, the regulatory burden for all parties involved may increase. To avoid such additional oversight, ACM points out the option of placing a heat company outside the network group.

Guidelines on the role of network companies with regard to alternative energy carriers

In addition to the recommendations for EZK, ACM has drawn up draft guidelines in order to provide more clarity regarding the activities related to alternative energy carriers that network companies can and cannot carry out on the basis of existing rules and regulations. There are many questions about these activities of network companies. Alternative energy carriers such as hydrogen, natural gas, and heat and cold increasingly play a more important role in the energy transition. In this transition, ACM supports an energy supply that is affordable, reliable, and sustainable.

ACM invites market participants to share their opinions about these draft guidelines. The final guidelines will be published in May.

See also

The energy transition (in Dutch)
26-03-2020 ACM gives Minister of Economic Affairs and Climate Policy Eric Wiebes its recommendations about the role of network companies with regard to heat (in Dutch)
24-03-2020 ACM launches public consultation of ‘Guidelines regarding network companies and alternative energy carriers’ (in Dutch)