Tariffs for regional network operators of electricity and natural gas decrease in 2014

In 2014, the maximum tariffs of the regional network operators for electricity will, on average, decrease by 7 percent, and the tariffs of the regional network operators for natural gas, on average, by 5 percent. These are some of the conclusions of the 2014 tariff decisions that the Netherlands Authority for Consumers and Markets (ACM) published today.

These tariff decisions follow the method decisions for the 2014-2016 regulatory period, which were released this October. Regional network operators take care of the transmission of electricity and natural gas. Consumers and businesses pay for transmission through their energy bills. Approximately 20 percent of their energy bills are transmission costs.

Room for regional differences in transmission tariffs for electricity

Across the board, transmission tariffs of the regional network operators for electricity decrease, on average, by 7 percent. The exact decrease for each network operator may be higher of lower than this average, depending on that operator’s individual circumstances. ACM takes into account the local circumstances of each network operator. For example, in regions where network operators pay lower local taxes, the transmission tariffs can be lowered more than in other regions.

Tariffs for regional network operators for natural gas decrease too

The tariffs for the regional network operators for natural gas decrease as well, on average, by 5 percent. The network tariffs for natural gas consist of two components: the connection tariffs and the transmission tariffs. ACM sets the connection tariffs using a cost-based method. This means that the amount customers pay for a natural-gas connection is based on that connection’s actual costs, including a reasonable return that network operators are allowed to earn.

In the previous regulatory period of 2011-2013, ACM set the connection tariffs for the first time ever. For several network operators, in particular Cogas, Endinet, Liander and Stedin, it turned out that their costs exceeded the tariffs in the past three years. The connection tariffs of these network operators will therefore increase in the next regulatory period, bringing them in line with their actual costs. At the same time, the transmission tariffs of these network operators decrease. The revenues of these network operators will, on balance, not increase.

Regulation of monopolists

A new three-year regulatory period will begin on January 1, 2014. ACM regulates the tariffs for the regional network operators for electricity and natural gas, because customers are unable to choose their regional network operator themselves. ACM tries to create certain incentives for the network operators in its tariff regulation, as it wishes to reward efficiency. In addition, they are given enough room to be able to make necessary investments. Because ACM sets the maximum transmission and connection tariffs, network operators will be unable to charge unnecessarily high tariffs.

The network operators and other interested parties have the opportunity to file objections and appeals against these tariff decisions. If objections were to be filed against these tariff decisions, the new tariffs would nevertheless come into effect on January 1, 2014. If an objection were to be allowed, any underpayments or overpayments would be settled with future tariffs.