ACM sets new rules for reasonable energy transport tariffs
The Netherlands Authority for Consumers and Markets (ACM) has drawn up new rules for determining the revenues of the network operators for electricity and natural gas for the period of 2017 through 2021. Each year, ACM sets, on the basis of these ‘method decisions,’ the tariffs that network operators are allowed to charge their buyers (businesses and consumers).
The purpose of the method decisions is to come to reasonable tariffs for buyers for the transport and distribution of electricity and natural gas. In that process, operators must be able to recoup their investments, for example in sustainability, insofar such investments are efficient. In that way, consumers do not end up paying too much, while system operators are able to recoup enough of their investments in order to continue making investments in a sustainable and secure supply of energy. Today, ACM has published the method decisions for the transmission system operator (TSO) for electricity, TenneT, and for the distribution system operators (DSOs). The method decisions for the offshore grid (TenneT) and for the TSO for natural gas, Gasunie Transport Services (GTS), will be released later this year.
Method decisions will apply for 5 years
In a first, ACM has opted for a regulatory period of five years instead of the usual three years. A longer regulatory period offers network operators and buyers more clarity and certainty, and it helps ensure regulatory stability.
Distinction between various types of loans to achieve a reasonable return
In addition to the efficient costs that the system operators must be able to recoup, they also need to be able to achieve a reasonable return. To that end, ACM explicitly distinguishes between the different types of loans. After all, loans that operators had taken out in the past are more expensive than those they would have taken out today. ACM makes this distinction as a result of a ruling by the Dutch Trade and Industry Appeals Tribunal (CBb) in January 2016.
Faster adjustment of the revenues of system operators
With the new method decisions coming into force, ACM will be able to base directly the system operators’ revenues on the efficient costs that they incur. Consumers are thus immediately charged the right tariffs, whereas, until now, such adjustments had been made more gradually.
Tariffs will be set by the end of 2016
In April 2016, ACM put out the draft method decisions for consultation. It has now adjusted and finalized the method decisions. The calculation of the tariffs is a two-step process. First, ACM calculates the percentages with which the system operators’ revenues should decrease or are allowed to increase each year (these are called the x-factors). ACM will publish these percentages soon. ACM subsequently sets the 2017 tariffs by late-2016, the 2018 tariffs by late-2017, etc.
Method decision for the offshore grid will be published in September 2016
ACM will publish a separate method decision for the operator of the future offshore grid. The offshore grid will connect the yet-to-be-built offshore wind farms in the North Sea to the onshore grid. ACM was only able to start with the consultation of the draft method decision for the offshore grid in May 2016, as the relevant legislation only became ready in April 2016. ACM expects to finalize this method decision in September 2016.
Method decision for GTS will be published in late-2016
ACM will also publish a separate method decision for GTS, the TSO for natural gas. This is expected to be released in late-2016. In a first, the draft version of this decision contains a comparison of GTS’ cost efficiency with that of other, comparable European TSOs for natural gas. One of the conclusions from that benchmark is that GTS makes more costs than necessary. In the consultation, ACM received a lot of comments from GTS and interested parties about this cost benchmark. The nature and amount of these comments in particular prevented ACM from finalizing the method decision for GTS sooner.
Efficient system operation
ACM supports the objective of realizing an affordable, secure, and sustainable supply of energy. It regulates system operators, which enjoy a monopoly on the transmission and distribution of electricity and natural gas. ACM’s regulation ensures that tariffs are not higher than necessary, and it helps create a healthy investment climate.