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ACM will be able to protect heat consumers better against heat suppliers

21-02-2020

The Netherlands Authority for Consumers and Markets (ACM) will be able to protect heat consumers better against their suppliers. If it is up to the Minister of Economic Affairs and Climate Policy, ACM will be given more abilities to correct  heat tariffs if a heat supplier earns too high a return. In addition, ACM might eventually be able to base the maximum heat tariffs on the efficient costs that the supplier incurs. That is important because heat consumers are completely dependent on their suppliers, and have no other choice. These are the main points from the contribution made by Remko Bos, Director of ACM’s Energy Department, during a briefing in the Dutch House of Representatives on 19 February 2020.

Setting the financial returns and tariffs per supplier

ACM will eventually be able to set the financial returns for each heat supplier. Using a return analysis, ACM will determine whether an individual supplier earns a higher than ‘reasonable’ return. If that is the case, it can lower that heat supplier’s tariffs for the following year. This analysis will have to be conducted with care, as a company can also achieve a higher return because it operates more efficiently than another company. Efficiency should not be punished.

The three financial-returns monitors that ACM have already published reveal that the financial returns of heat suppliers have risen over the past few years. However, the returns appear to vary tremendously among heat suppliers.

Basing tariffs on efficient costs

Another one of the minister’s plans is to base the maximum heat tariffs on the efficient costs that the heat supplier incurs. This might become the basic principle, laid down in the new Dutch Heat Act. ACM welcomes this plan. It helps towards increased transparency about the heat tariffs, protection of consumers, and towards a healthy investment climate, Mr. Bos said at the briefing.

The maximum heat tariffs are currently based on the so-called No-More-Than-Otherwise principle (in Dutch: Niet-Meer-Dan-Anders or NMDA principle). This ensures that, for indoor heating and hot tap water, an average consumer connected to a heat network will, in total, pay the same as consumers connected to a natural-gas network. If total costs for gas consumption go up or down, the costs for consumers with heat connections will go up or down accordingly.

Consumer protection for heat customers

In the energy transition, ACM also pays attention to the protection of consumers. This expressly applies to the supply of heat as well. More and more households receive individual-building heating and district heating. They are entitled to a secure supply of heat, at transparent prices, and under reasonable conditions. ACM enforces compliance with these rules.

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