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ACM to impose additional requirements on energy suppliers in anticipation of upcoming legislation

The Netherlands Authority for Consumers and Markets (ACM) will impose on energy suppliers that supply or want to supply electricity or natural gas to consumers additional requirements regarding their financial, organizational, and technical competencies. ACM will discuss with the Minister for Climate and Energy Policy about how these requirements can also be included in the new Dutch Energy Act.

Energy companies will have to substantiate better their financial continuity and the viability of their business plans, among other requirements. In addition, they must demonstrate that they have the proper risk-management procedures in place. The requirements regarding expertise will also become stricter. With these additional requirements, ACM acts on the recommendations that followed from an external study into ACM’s regulation of energy suppliers.

Martijn Snoep, Chairman of the Board of ACM, explains: “ACM commissioned a study by external experts to examine whether we could do more to protect consumers against possible financial problems of energy suppliers. We will start using the extra latitude that the researchers found under the current rules and regulations. On top of that, however, additional legislation is needed.”

The additional requirements are aimed at making energy suppliers more resilient to sudden purchase-price increases on the energy market. These requirements cannot prevent all bankruptcies, but they can reduce the likelihood thereof. That is why ACM together with the Dutch legislature will also examine in what ways vulnerable consumers can be protected better against the financial consequences of bankruptcies.

ACM will flesh out in greater detail the current legal requirements regarding financial, organizational, and technical competences in policy rules on the basis of discussions with the sector, policymakers, consumer organizations, and experts. ACM will release a draft version of these policy rules for public consultation by the summer, so that they can go into effect at the start of the new heating season on 1 October 2022.

The purpose of this external study and its recommendations 
At the request of ACM, the external researchers examined what latitude exists in the current rules and regulations for making the requirements for energy suppliers and the regulation thereof stricter with an eye to protecting consumers better. In addition, the researchers also examined what parts of the current rules and regulations could be amended. All of this resulted in various recommendations for ACM and the legislature. The researchers concluded that, within the current rules and regulations, ACM still has additional latitude. At the same time, the researchers recommend amending the rules and regulations. These amendments could be incorporated into the new Energy Act, which is set to replace the current Dutch Electricity Act and Dutch Gas Act.

ACM’s regulation of the energy sector

ACM regulates the energy sector with an eye to affordability, security of supply, and sustainability, both in the short term and the long term. Companies that supply electricity and natural gas to consumers must have a license to do so. ACM issues such licenses, and may impose requirements. ACM enforces compliance with those requirements. Energy suppliers are free to set their own tariffs. ACM only checks whether or not they charge unreasonable fees on top of their purchase prices. The purchase prices for natural gas and electricity are determined on the international energy markets. Since network companies have a monopoly on the transmission of electricity and natural gas, the transport tariffs of these companies are set by ACM. 

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