NMa Improves Competitive Relationships between Energy Distributors

The Netherlands Competition Authority (NMa) has decided that in future network managers may settle the loss of network revenues, as a result of the bankruptcy of an energy distributor, in their network tariffs. Previously network managers required financial guarantees from energy distributors in order to absorb any bankruptcies. The financial guarantees required of new energy distributors were generally higher than those required for energy distributors which were part of a concern with its own network. As a result, newcomers were at a competitive disadvantage compared to existing energy distributors. After all, energy distributors cannot circumvent network managers operating in the region. They are obliged in a certain region to make use of the infrastructure of the network manager for the transmission of gas and electricity. On the other hand, network managers are obliged to give distributors access to their networks.

By means of an amendment to the Electricity Tariff Code, it is no longer necessary for network managers to require guarantees. As Peter Plug, the Director of the Office of Energy Regulation (DTe) of NMa explains: "We wish to ensure that all energy distributors have a level playing field on the market. By giving the network managers the opportunity to settle any loss of revenues through their tariffs, they no longer have to ask newcomers for financial bank guarantees. By doing so, we improve the competitive relationships on the energy market."

The decision is based on the outcomes of research carried out at the end of last year by KPMG for DTe. The consultation between EnergieNed (the branch organisation of energy companies) and DTe did not result in concrete proposals by the energy branch. For this reason, the regulator itself made a proposal to amend the Electricity Tariff Code. DTe proposes including a similar provision in the Gas Tariff Code.

In August of this year the regulator presented its draft decision amending the Electricity Tariff Code. The final decision was published today and can be obtained from the websites of NMa (www.acm.nl).