Dutch producers do not currently pay transport tariffs. The existing regulatory system provides that transport-related costs of infrastructure operated by the network operator are allocated among end users and central producers, whereby end users bear 100% of the costs while central producers (connected to high-voltage grids) bear none. This allocation is the basis for calculating the national uniform producers transport (LUP) tariff; consequently, the LUP tariff payable by central producers is zero.
With respect to decentralised (local) producers (eg, sustainable power and combined heat and power producers), the competent court in energy regulatory affairs ruled in December 2011 that the applicable tariff structure does not provide for a specific tariff carrier that enables regional network operators to charge transport tariffs to local producers feeding in on regional networks.
In the energy report of June 2011, the government published its view on the developments in the energy sector and described its energy policy for the next five years. The minister of economic affairs explained that the costs of investing in infrastructure are currently recouped from the network tariffs charged to Dutch customers. He pointed out that after being a net importer for many years, the Netherlands is developing into an exporter to other European countries as a result of steadily growing electricity production capacity.
The question arose of whether it is reasonable that national customers should pay all the investment costs of expanding the networks or if a proportional sharing of costs between producers and consumers or between European customers on the basis of the profit principle would be more appropriate. Such cost allocation could be done by way of a producer tariff, in which network costs are partially attributed to producers, which benefit from investments in additional infrastructure. The minister predicted that a better system of cost sharing would also lead to more efficient network planning, because when taking investment decisions, producers would make allowance for the cost of additional investments in networks.
According to the minister, in order to maintain a level playing field in Europe, the decision making on these matters should preferably take place at European level. Nevertheless, the government has also explored options for distributing the costs more proportionally between producers and customers in the Netherlands. Such cost allocation should not distort the functioning of the European market or damage the ability to attract new businesses to the Netherlands and must remain within the framework of European law.
In 2011 Parliament adopted a motion instructing the minister to assess the effects of changing the current zero rate for the LUP tariff. The minister sent a letter to Parliament in May 2012 regarding his assessment, which indicated that he is now also considering the feasibility of a transport tariff payable by local producers connected to the regional networks. He acknowledged that on one hand, local production may contribute to network stability, but on the other may lead to congestion when local production significantly increases, in particular when demand stays the same or decreases.
As a result, there appear to be two possibilities under consideration:
- a producer's transport tariff for all producers (centralised and decentralised); or
- a transport tariff payable by centralised producers only (exempting local producers).
The minister emphasised in his letter that a transport tariff payable by local producers only (ie, exempting centralised producers) is not under consideration.
The minister expects the assessment to be finalised this summer. Although the Dutch government tendered its resignation on April 23 2012, with new elections scheduled for September 12 2012, it is likely that this timeframe can still be met.
For further information please contact Roland de Vlam at Loyens & Loeff NV by telephone (+31 20 578 5785), fax (+31 20 578 5800) or email ([email protected]).