NMa: slight increase in tariffs for electricity and natural gas enables regional network operators to invest

In the next few years, transmission and connection tariffs for electricity and transmission tariffs for natural gas will see a slight increase of 5 to 7 per cent per year, on average. The total increase in the natural-gas tariffs is, however, tempered by a substantial decrease in the connection tariffs of natural gas, resulting in a total tariff increase of approximately 2 per cent per year. These two conclusions can be drawn from the two method decisions that the Board of the Netherlands Competition Authority (NMa) has published today. In these decisions, the NMa has laid down in what ways the regional network operators of electricity and natural gas are allowed to set their tariffs for the upcoming regulatory period (2011 through 2013). Jaap de Keijzer, member of the Board of the NMa, explains: 'Through its regulatory activities, the NMa works towards affordable, reliable, and clean energy. And, as the NMa annually sets the maximum transmission and connection tariffs, we are able to prevent network operators from setting unnecessarily high tariffs. We are firm believers of fair prices for consumers.'

More transparent connection tariffs for natural gas
In the new method decision for the regional network operators of natural gas, regulation of the gas connection service has been set for the first time. This step will lead to lower and more transparent connection tariffs for consumers. The gas connection service tariffs will substantially decrease in the next regulatory period. The NMa is expecting the gas connection tariffs to decrease by a quarter, on average, for the period of 2011 through 2013.

Increasing transmission tariffs for electricity and natural gas
The tariff increase of 5 to 7 per cent is a partial reflection of an effort to have these tariffs be brought up to par, because the current tariffs have been unable to cover all costs for some time now. The transmission and connection tariffs for electricity and the transmission tariffs for natural gas have thus been increased, because the NMa is expecting additional cost increases with regard to renewable energy and replacement investments.

From method decision to tariffs
The method decisions can be found at www.acm.nl. The effects of these decisions on the transmission and connection tariffs will become known when the 2011 tariff decisions are set in late 2010.

Regulation of monopolists
The NMa regulates the network operators because they do not face any competition in the market – they are natural monopolists in their respective distribution areas. Consumers are bound to the network operator in their areas. The NMa stimulates network operators to work more and more efficiently – in this way, the NMa is simulating a free-market situation in a market dominated by monopolists, which is completely in the interest of consumers. Because of its regulatory activities, the NMa is able to prevent network operators from charging unnecessarily high tariffs for transmission and connection services.

Fair tariffs
With the publication of these method decisions, the NMa seeks to have the tariffs continue to be a fair reflection of the costs. Consumers are thus assured that they do not pay more than necessary for transmission and connection services. At the same time, however, the NMa allows for a reasonable return on investment to be included in these tariffs. Network operators will thus be able to attract sufficient funds for investments in their electricity and natural gas transmission networks in order for them to continue guaranteeing energy supply in the future.