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ACM: average returns of heat suppliers did not go up in 2022, despite the higher maximum tariff

The average financial returns of heat suppliers went down from 5 percent in 2021 to approximately 2.7 percent in 2022. This drop is predominantly caused by the high energy prices and a decline in heat consumption. This has been revealed by the Financial-return Monitor for heat suppliers, which has been published by the Netherlands Authority for Consumers and Markets (ACM). ACM has called on suppliers not to abuse the high maximum tariffs when setting their tariffs for 2022.

ACM oversees the financial returns of suppliers, and, every two years, publishes the results of this oversight. The definitive weighted average of the returns in 2022 can still change, because it is based on provisional numbers of the heat suppliers. Several suppliers whose returns are significantly above the average will have to explain why this is necessary. Heat suppliers that charge the maximum tariff of 90.91 euros per gigajoule (GJ) in 2023, too, must justify why doing so is necessary for achieving a reasonable return. ACM will assess the justifications given by suppliers, and will publish its findings in the second quarter of 2023.
ACM believes it is important that suppliers are transparent about their costs and revenues, and calls on suppliers to explain actively to customers why their tariffs are higher. ACM is in discussions with Energie Nederland, the trade association of the Dutch energy industry, about how energy suppliers should do so.

Manon Leijten, Member of the Board of ACM, adds: “Households that are connected to heat networks don’t have a choice, and must pay what their supplier charges. Many heat suppliers have increased their prices because they have to buy natural gas and electricity for their heat production. These suppliers thus incur higher costs as a result of the high energy prices. This doesn’t apply to all suppliers. However, the higher maximum tariff that is linked to the natural-gas price does apply to all suppliers. That is why ACM is in favor of no longer setting the maximum tariffs on the basis of the natural-gas price, but on the basis of the actual costs of suppliers. This is important for consumer confidence, and that confidence is essential because, over the next couple of years, more and more households will be connected to a heat network.”

Abolishing the no-more-than-otherwise principle

Every year, ACM must set a maximum tariff for heat. Suppliers must always remain below this maximum. The legislature has determined that ACM can only set the maximum tariff on the basis of the natural-gas price of 1 January. This is called the natural-gas reference price or the no-more-than-otherwise principle (in Dutch: niet-meer-dan-anders principe). The rationale behind this principle is that a household connected to a heat network never needs to pay more than a similar household would with a gas-fired central-heating system. Since 2015, ACM has argued in favor of abolishing the natural-gas reference price, because the maximum tariff that is based on this reference price does not take into account the actual costs of heat suppliers. However, this requires a legal amendment. The Ministry of Economic Affairs and Climate Policy (EZK) seeks to have the new rules making such an abolition possible come into effect on 1 January 2025. Abolishing the no-more-than-otherwise principle does not mean that tariffs for
all heat users will automatically go down. However, heat users will then be able to assume that the tariffs will be based on the actual costs for suppliers.

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