ACM’s tariff decisions: TenneT’s tariffs to remain stable in 2014

The maximum tariffs of TenneT, the Dutch transmission system operator for electricity, are to remain stable in 2014. These are the tariffs that TenneT charges the regional network operators and other buyers for the transmission of electricity, and for keeping the supply of electricity secure and safe. As a result of ACM’s regulatory efforts, buyers pay a reasonable price for TenneT’s services.

The tariffs on the extra high-voltage grids slightly decrease, on average, by 0.5 percent. The tariffs on the high-voltage grids increase, on average, by 3.5 percent. The tariff for keeping the supply of electricity secure and safe, which is called the system services tariff, decreases, on average, by 9 percent. All tariffs have been adjusted for inflation (an increase of 2.8 percent).

Investments in a secure and safe supply of energy

TenneT is facing several major investments that should guarantee a secure and safe supply of energy in the future as well. For example, TenneT worked on a stretch near the Dutch towns of Bleiswijk and Wateringen, connecting existing high-voltage connections, and thereby creating a new ring. TenneT has been given room in the 2014 tariffs to accommodate the capital costs of this large-scale investment.

Auction revenues prevent tariff increase

Trading in electricity is an international affair. Major firms and traders buy electricity abroad, or electricity is sold in the Netherlands to non-Dutch firms. Sometimes, demand for cross-border trade exceeds what the cross-border connections are able to supply. TenneT is then forced to auction the ‘scarce’ capacity, thereby earning money in the process. According to European rules, these auction revenues must first be used for the expansion of cross-border connections. Under special circumstances, part of these funds may also be used to prevent tariff increases. For 2014, ACM gives TenneT room to use EUR 87 million from these auction revenues to prevent a tariff increase. As a result, TenneT’s tariffs are able to remain stable this time. This marks the first time ever that auction revenues have been used for the tariffs.

Impact on energy bills

TenneT’s transmission costs are not a direct item on the energy bills of consumers and businesses. Over the high-voltage grids and extra high-voltage grids, TenneT transmits electricity to regional network operators. However, the costs of these regional network operators do appear on the energy bills of consumers and businesses. ACM expects the regional network operators to pass on the effects to their customers through their tariffs. However, all energy consumers are directly charged the tariffs for maintaining the supply of electricity safe and secure. These are listed on energy bills as ‘system services.’

ACM’s regulatory approach

A new three-year regulatory period will begin on January 1, 2014. ACM regulates the tariffs of TenneT, which enjoys a monopoly position. ACM tries to create certain incentives for TenneT in its tariff regulation, as it wishes to reward efficiency. With this regulatory approach, TenneT is given enough room to be able to make necessary investments. And because ACM sets the maximum tariffs for TenneT’s transmission and system duties, the transmission system operator will be unable to charge unnecessarily high tariffs.

Procedure

TenneT 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.