ACM: deal over closing down coal power plants harms consumers

The agreement between energy companies to close down five coal power plants, as part of the Dutch Energy Agreement, on balance, harms consumers, and offers too few environmental benefits.

That is the conclusion of the Netherlands Authority for Consumer and Markets (ACM) in response to the deal that several energy companies struck, wishing to accelerate the closings of these five coal power plants. ACM’s analysis was carried out at the request of these companies. As the competition authority, ACM makes sure that companies do not make arrangements among themselves that harm consumer interests.

‘We have established that the energy companies’ deal will result in drawbacks for consumers. The deal leads to higher energy bills for consumers because production capacity is reduced. We have additionally found that the environmental benefits that these parties are offering are too small to offset these drawbacks,’ says Henk Don, Member of the Board of ACM. ‘It is up to the parties involved in the Energy Agreement to seek alternative measures that are beneficial to the environment. Preferably, those alternative measures would leave consumers better off, too.’

The deal involves closing down five coal power plants, approximately 10 percent of the Dutch production capacity of electricity. This would lead to an increase of consumer electricity prices. ACM examined in several ways whether the deal’s proposed environmental benefits were substantial enough to offset the price increase for consumers. ACM concluded that this was not the case. Since the positive environmental benefits are not substantial enough to offset the higher energy bills for Dutch consumers, the deal as currently included in the Energy Agreement must therefore be considered to be in violation of Dutch competition rules, which prohibit anticompetitive behavior by companies.

One aspect that plays a role in that conclusion is the issue of possible reduction of carbon dioxide (CO2) emissions, claimed to be the result of closing down those five coal power plants. In the current proposal, this claim is cancelled out by the fact that these emission rights can be used elsewhere on the European market for CO2 emission rights. Emissions are thus not reduced but are merely transferred elsewhere.