On 13 October 2015 the Lower House of Dutch Parliament adopted an amended version of the Dutch STROOM Bill (see our previous article) (the “new Act”). Now, only the Upper House can prevent the new Act from becoming effective on 1 January 2016.
The forced ownership unbundling for two Dutch companies, Delta and Eneco, proved to be the most hotly debated item in the STROOM Bill. However, in the heat of these fierce discussions, several other amendments to the STROOM Bill were adopted in the fray. These amendments have potentially serious implications for the security of the gas and electricity supply to the Netherlands as they limit the possibility of Dutch TSO's to strengthen their strategic positions abroad through cross participation.
For example, on the same day the Bill was adopted, a motion to limit the possibilities of a share swap was also adopted. As a result, the new Act only allows a maximum of 25% of the shares in the Dutch TSO's to be swapped. The STROOM Bill originally introduced the possibility of cross participation through a share swap with another - foreign - TSO and stipulated that the Dutch State was to retain ultimate control (more than 50%), and that the foreign entity should be an independent and certified TSO.
According to the petitioners, the Dutch gas and electricity infrastructure is of such importance, that the public interest can only be properly guaranteed if the Dutch State retains, at all times, 75% of the infrastructure. The motion has substantially toughened the conditions for a cross sale by stipulating that the shares in a Dutch TSO can only be sold to TSO's with networks that are directly linked to, or have an interconnector to, the Netherlands. The conditions are to be set out in more detail in lower legislation and Parliament is to approve the share swap.
This means that Gasunie and TenneT can only enter into a share swap agreement with TSO's in Germany, Belgium, the UK and Norway. The Minister has argued (to no avail) that limiting the share swap possibilities to these countries is not desirable as a cooperation with TSO's in other countries could help strengthen the security of supply.
More importantly, the new wording of the Bill does not recognize the fact that a share swap of (less than) 25% may not be sufficient to properly align the financial and strategic interests of the parties and will therefore in practice prove to be an undesirable vehicle of cooperation.
The adoption of this motion has resulted in statutory limitations for both Gasunie and TenneT that will make it much more difficult for these entities to strengthen their strategic positions in Europe.