NMa proposes stricter tariff regulation for energy transmission

The four largest integrated energy companies realised more profit on the transmission of electricity and gas in 2004 and 2005 than NMa considers fair. On average per consumer the difference between the actual return realised and the return which is considered fair amounted to approximately EUR 31 per annum where the average amount charged for the transmission of electricity and gas is EUR 470 a year. This difference, however, varies considerably from one energy company to the next. It emerged from the research that energy companies have realised these profits entirely within the existing legal frameworks. There is no question of illegal practices.

This emerges from research by NMa into the extent, source and allocation of the profits of Delta, Eneco, Essent and Nuon. NMa decided to carry out this research because the present regulatory frameworks have now been in force for four years. The research therefore provides an insight into the effectiveness of these frameworks. Another reason for the research was the political and social discussion which arose with regard to the profits of energy companies.


The extent of the profits shows that even stricter regulation of the transmission tariffs is possible. In the period 2001-2007, NMa brought about savings amounting on average to EUR 45 a year for consumers of electricity and gas, which amounts to a total of approximately EUR 1.9 billion.


The profit, which is considered to be more than fair, is due to three factors: a growth in volume, differences in the valuation of assets and the time NMa gave companies to increase their efficiency. The effect which these factors have had in increasing profitability is greater than intended. NMa will put forward the regulatory measures required to reduce the difference between a fair profit and the realised profit shortly. The ambition is, as always, to combine a fair price for consumers with a guaranteed transmission. If amendments to legislation are required for this, NMa will advise the Minister of Economic Affairs in this regard.


At the same time, NMa examined whether the profits of energy companies were possibly caused by unauthorised cross subsidisation between the integrated energy companies. The trade journals regularly reported that the companies charged excessive internal transfer prices to network managers. However, research carried out by NMa has provided no evidence of this. The outcomes of the research showed that the chance that this may happen within the holdings is very slight.


NMa will carry out research into the extent, source and application of profits periodically, namely at the end of each regulatory period. The outcomes of this research will serve as input for the next regulatory period.


Both research reports are only available in Dutch, though English summaries are available.