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Tariffs for transmission of natural gas to decrease gradually

24-02-2017

The Netherlands Authority for Consumers and Markets (ACM) has set the rules that it will use to determine what the annual revenues of Dutch gas transmission system operator Gasunie Transport Services (GTS) can be for the next few years (2017-2021). For each year, ACM will set the maximum tariffs, in accordance with these rules, that GTS is allowed to charge its buyers.

Comparing GTS with other European TSOs for natural gas

In order to determine the level of the tariffs, ACM had, for the first time ever, two external benchmark studies carried out. In these studies, ACM compared GTS’ cost efficiency with that of other European TSOs. These studies revealed that GTS is less efficient than its most efficient European counterparts. When determining the revenues that GTS is allowed to charge its customers, ACM took the findings of these two studies into consideration.

New, lower tariffs from July 1, 2017

As result of the method decision, GTS’ revenues in 2017 will drop by approximately EUR 100 million, followed by a gradual drop of over EUR 100 million in total between 2018-2021. GTS’ revenues will thus decrease from over EUR 1 billion to approximately EUR 800 million. The new, lower tariffs for GTS’ buyers are expected to come into effect on July 1, 2017. Until then, the 2016 tariffs will continue to apply. When determining the tariffs for 2017, ACM will take into account GTS’ revenues from the first six months of 2017.

Increased certainty regarding the level of the tariffs

The rules, which are also called the ‘method decision,’ have been established following talks with GTS and various interest groups in the Dutch energy sector (the Dutch representative of business energy users VEMW, the trade association of the Dutch energy industry Energie-Nederland, the trade association of gas storage operators in the Netherlands Vereniging Gasopslag Nederland, the Netherlands Oil and Gas Exploration and Production Association NOGEPA, and the Dutch Renewable Energy Association NVDE). These talks were held in addition to the usual consultation process.

Henk Don, Member of the Board of ACM, explains: “Prior to the publication of these rules, we had extensive talks with GTS and interest groups about how we would use these benchmark studies in the calculation process of GTS’ maximum revenues. Based on these consultations, the parties have agreed not to challenge several key elements of the method decision. As a result, buyers and GTS have more certainty regarding the level of the tariffs for the next few years. That will help increase stability and help towards a more secure investment climate.”

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 offers system operators a reasonable return on their investments.