NMa: Dutch network operator NRE is ordered to improve the safeguarding of its energy provision's quality and reliability

The Netherlands Competition Authority (NMa) has imposed an order subject to periodic penalty payments on Dutch network operator NRE Netwerk B.V. (NRE). An NMa investigation has revealed that not all of NRE's procedures are up to par with official regulations's requirements in order for it to guarantee its electricity and natural gas networks' quality and capacity. The order forces NRE to have two of its procedures amended by December 1st, 2009 under penalty of a penalty payment of up to €250,000. NRE is the first network operator of which the NMa's investigation into the networks' safeguarding of quality and capacity has been fully completed. The NMa is expected to announce soon whether, and if so what kind of steps it will take with regard to the other network operators.

In 2008/2009, the NMa reviewed the so-called 'Quality and Capacity Documents' (KCDs) of the network operators for the second time. Using these KCDs, network operators need to demonstrate that they have sufficient capacity to transport electricity and natural gas from their sources (the supplier) to a business or a household. NRE's documents lacked a thorough risk analysis, which is used to pre-detect possible threats to the network's quality. Also missing are the correct procedures to monitor the quality of the pipelines and power cables.

Chairman of the Board Pieter Kalbfleisch emphasizes that the quality of energy provision in the Netherlands is currently at an extremely high level. 'We have one of the best networks in Europe,' he says. 'However, in order for our network to remain one of the best calls for having excellent management and maintenance of these networks on a permanent basis. This is not only important for today but also for tomorrow – to make sure that we nor our children have to suffer from power failures or power cut-offs. Electricity and natural gas are basic facilities, so any disruption in the supply thereof immediately has siginificant economic and public consequences.'

This year has also seen the launch of an NMa investigation into the network operators' investments. The investigation's objective is to determine whether network operators invest enough in their networks. It also examines whether network operators have enough financial resources to finance necessary investments in their networks. The investigation will look into the investments made over a number of years in the past. The NMa expects to finish the investigation in late 2009. Its findings should serve as input in answering the question whether there is reason for concern about the network's future quality, given current regulations as well as current levels of replacement investments.