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ACM takes into account the energy transition when setting the network tariffs

The Netherlands Authority for Consumers and Markets (ACM) is committed to keeping the supply of energy sustainable, secure and affordable, now and in the future. That is why, over the next few years, ACM, when setting the transport tariffs for natural gas and electricity, will take into account the fact that extra costs are needed for the energy transition. ACM will make sure that system operators are able to incorporate some of the costs into their network tariffs sooner, in order to give grid operators more financial leeway for making necessary investments. ACM will include this in its method decisions for Dutch transmission system operator for electricity TenneT and for the distribution system operators for electricity. Additionally, ACM will ensure that distribution system operators for natural gas are compensated for their costs sooner, thereby preventing substantial increases in the transport tariff in the future.

In these method decisions, ACM sets, for each system operator, the methodology with which, for the next five years, the allowed revenues of the system operators are calculated. The level of the allowed revenues is the basis for the tariffs that system operators are allowed to charge for the connection and transport of natural gas and electricity. Through this regulatory regime, ACM ensures that system operators receive sufficient revenues to cover the costs of investments. On the other hand, ACM makes sure that the tariffs of system operators are not higher than reasonable, and it stimulates system operators to operate efficiently.

Investing in the energy transition

Fossil fuels are replaced on an ever larger scale by renewable energy sources, particularly solar energy and wind energy. Over the next few years, significant investments must be made in the expansion and strengthening of the power grid in order to be able to transport that sustainable electricity. System operators must have sufficient financial resources for such investments in the energy transition. In order to give system operators of the power grid additional financial leeway to make those necessary investments, system operators are allowed to incorporate part of the costs they incur into their tariffs already today. With the additional leeway that is given, people and businesses will, on balance, not pay more, but rather slightly sooner. In that way, the costs for the energy transition will be distributed more fairly over the different generations. This is important because the electricity bill must remain affordable for people and businesses, now and in the future. ACM expects that the system operators will actually use that additional leeway towards the energy transition, and ACM will also keep a close watch on this over the next few years.

Effects on consumers

Network costs make up a small share of the total energy bill for consumers. ACM’s decisions are not expected to lead, on balance, to an increase in the tariffs for consumers. The additional leeway for system operators is offset by the low interest rate. Each year, ACM sets the exact level of the tariffs in its tariff decisions. Therefore, it remains uncertain what the tariffs will actually be over the next five years. It is expected that, over the next few years, the network costs for an average household may go up no more than several euros a year.