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Financial returns of heat suppliers have risen over the past few years

01-10-2019

The average financial return of heat suppliers has risen over the past few years. In 2015 and 2016, these returns were still below what is considered a ‘reasonable return’. In 2017, these returns were already slightly higher, and, in 2018, they were above the ‘reasonable return’. The picture remains mixed: a number of large suppliers earned higher returns than the more than 20 small-scale suppliers. This is revealed by the Financial-returns Monitor over 2017-2018, which the Netherlands Authority for Consumers and Markets (ACM) has published.

Returns

Over the past few years, the average financial return of heat suppliers was as follows:

  • 2015: 2.2%.
  • 2016: 4.8%.
  • 2017: 5.8%.
  • 2018: 6.8%.

In the monitor, ACM takes as its starting point a reasonable return of between 5.2% and 6.6% for the past few years. The fact that heat suppliers operating larger networks generate higher returns than those operating smaller networks is probably caused by the former’s enjoying economies of scale. In addition, they also have, generally speaking, older networks, which have already been partially written off.

Dependence

Some of the factors that the financial returns of heat suppliers depend on are the purchasing prices of natural gas and electricity, the weather, the number of connections established, and the life spans of the heat networks.

In the calculation of the abovementioned returns, the interest charges and the corporate taxes that heat suppliers have to pay were not taken into account. If they had been taken into account, the returns would have been lower.

Dutch Heat Act

ACM examines the financial returns of heat suppliers under the Dutch Heat Act, which came into force in 2014. ACM reports its findings to the Minister of Economic Affairs and Climate Policy.

See also

01-10-2019 ACM had the financial returns of heat suppliers examined (in Dutch)