DTe Holds Consultations on Regulation of TenneT

The Office for Energy Regulation (DTe) today published an information and consultation document on the regulation of TenneT in the second regulatory period which commences on 1 January 2004. TenneT is the manager of the national high-voltage grid and fulfils the role of the Transmission System Operator (TSO) for the Dutch electricity grid. DTe has asked market players to give their opinion of the most important amendments which the supervisor intends to make, compared to regulation in the first regulatory period.

One of the most important amendments proposed relates to the way DTe wishes to regulate TenneT as of 1 January 2004. Rather than imposing a price cap on tariffs, DTe wishes to calculate the price cap applicable to TenneT on the basis of its turnover. This will ensure that TenneT does not make excess profits, or for that matter large losses, if fluctuations occur in the quantity of electricity transmitted across the high-voltage grid. In addition, DTe argues that the regulation of TenneT should be set out in a performance contract in which the agreements between the regulator and TenneT are stated. This is necessary because the TSO has to carry out specific duties on behalf of the entire Dutch electricity market. One example of these duties is examining procurement processes with the aim of achieving savings on the prior contracting of the reactive and reserve power used for maintaining balance.

DTe will use the responses to the consultation document to take decisions which set out the system of regulation applicable to TenneT in the second regulatory period. Parties have until 12 April to respond to this information and consultation document. The document (in Dutch) is obtainable as of today from DTe's website.