uses cookies to analyze how the website is used, and to improve the user experience. Read more about cookies

ACM has set the rules for heat suppliers’ return assessment

The Netherlands Authority for Consumers and Markets (ACM) has set the rules for heat suppliers’ return assessment. With the heat return assessment, ACM can assess in the coming years whether heat suppliers have realized unreasonable financial returns. ACM has also carried out an investigation into 4 licensed heat suppliers that charged the maximum tariff for heat in 2023. The investigation revealed that these suppliers’ tariffs were not unreasonable. ACM continues to keep a close watch on heat suppliers’ tariffs.

As ACM has to set the maximum tariff for heat on the basis of the natural-gas price and not on the basis of the actual costs incurred by the heat suppliers, it is possible for suppliers to realize unreasonable financial returns. This is undesirable, because heat users cannot choose from which heat supplier they purchase heat. This is why the legislature has introduced the heat return assessment. ACM has set the rules for performing the heat return assessment and determining the cost of capital (WACC), and has published these rules on its website. From 2024 onwards, heat suppliers must take this into account when setting their tariffs. The Financial-returns Monitor outcomes, but also market-indications, can give rise to the implementation of a return assessment. ACM expects to carry out another Financial-returns Monitor for heat suppliers in early 2024.

The return assessment allows ACM to assess in individual cases whether the financial returns for heat suppliers is higher than the WACC set by the ACM. In such cases, ACM can force the heat supplier to pay the excessive returns realized back to consumers in the following year. In this way, the heat return assessment offers consumers additional protection against excessively high tariffs.

Heat tariff analysis 2023

Each year, ACM sets the maximum tariff for heat on the basis of the natural-gas price. As the natural-gas price was high when ACM set the maximum tariffs for 2023, these tariffs automatically went up. Heat suppliers must always offer tariffs below the tariffs cap, set by ACM. An analysis of the heat tariffs shows that 4 of the 31 licensed heat suppliers charge the maximum tariff. In response to ACM’s request, these suppliers have explained the reasons for charging the maximum tariff. The heat suppliers were able to give ACM an acceptable explanation.

Heat suppliers substantially increased their tariffs for consumers in 2023, predominantly as a result of the considerably higher natural-gas price. Natural gas is still often used to generate heat. Heat suppliers indicate that their returns are under pressure despite charging the maximum tariff. As heat suppliers charge the same tariffs for a whole year (comparable to an annual contract), they often purchase energy in advance. Suppliers subsequently include these purchase costs in the tariff. In 2022, therefore, heat customers suffered no inconvenience from the rise in wholesale prices for natural gas, because their tariff had been set in late 2021. In 2023, the reverse occurred. The decrease in the wholesale price for natural gas, that occurred in 2023, did not lead to a decrease in the tariff, because that tariff had already been set in late 2022. One thing that is important for households, is that they are protected by the price cap for a use of up to 37 GJ in 2023.

New Heat Act

The Dutch Collective Heat Act (in Dutch: Wet Warmtevoorziening) will in the future replace the current Dutch Heat Act (in Dutch: Warmtewet). ACM, as the intended regulator, has recently carried out a feasibility and enforceability test on the bill. Under the new law, the maximum tariffs for heat are no longer linked to the natural-gas price, but are based on the actual costs that heat suppliers incur. A maximum financial return (WACC) applies.

See more