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Netherlands Court of Audit endorses NMa's course of action

In its report on tariff regulation of energy grid administration network operation that was published today, the Netherlands Court of Audit (AR) endorses the Netherlands Competition Authority's taken course of action with regard to that subject. At the same time, the NMa sees the report as an incentive to further develop its tariff regulation activities.

The AR concluded that the NMa correctly calculated the figure of €1.9 billion in savings for the period of 2001-2007 that had been the result of tariff regulation of regional energy networks. An average Dutch household has thus saved around €45 on its average annual €470 energy transmission bill. Moreover, the AR believes an earlier NMa study into the profits of energy network operators, which served as input in the savings calculation, to be such a leap forward that it should be repeated on a regular basis, something the NMa will indeed do. The findings of those studies will lead to further savings for consumers. Tariffs for the period until 2010 have already been reduced even further because of the study into profits, which in turn will lead to even greater savings for consumers.

In its press release, the AR made some critical comments on the way the NMa and the grid administrators reached agreement on the energy networks' valuation back in 2003. The AR slightly adjusted these comments in its report, concluding that a proper valuation was not possible given the then prevailing circumstances. Believing that the outcome that was achieved at the time was optimal, the NMa thinks a new study into the grids' value would not lead to any new insights, since the required information, as it was then, is not available now either. The AR has also not ruled anything at all on the grids' value. The NMa firmly dismisses the notion the allegation that administrators had exerted too much pressure to come to a correct valuation.

The AR has urged the Dutch Minister of Economic Affairs and the NMa to reconsider the valuation system. The NMa is currently carrying out investigations into investments in and depreciations of grids by grid administrators, spanning multiple years. The investigations' results will improve the assessment method used in deciding whether the grids need to be revalued.

With regard to the AR's recommendation that the Minister of Economic Affairs should develop a vision for tariff regulation, the NMa notes that such a vision should preferably also shed some light on where the dividing line is drawn between the minister's policy-making and the NMa's oversight. That vision should also address the grid administrators' dividend policy. Dividend that is paid to shareholders, such as provinces and municipalities, might be at the expense of investments in those grids and, by extension, in their quality.

Hoping that it will spark off further debate on the future of tariff regulation, the NMa has today published a paper (in Dutch) reflecting on the future of grid administration regulation [Dutch title: 'Bespiegelingen op de toekomst van de regulering van het netbeheer'].