Regulation of power sales in Netherlands

Regulation of electricity utilities - sales of power

What authorisations are required for the sale of power to customers and which authorities grant such approvals?

The supply and sale of electricity to small-consumers, with a total maximum transmission value of less than or equal to 3x80A, is subject to a licence and certain terms and conditions as set out in the Electricity Act. The licence to supply to small-consumers is granted by the Minister of Economic Affairs and Climate. The Minister may attach certain conditions to the licence, and is allowed to revoke the licence if the supplier is not able to provide the electricity in a reliable manner to the small-consumer and on reasonable tariffs and terms and conditions. To protect the small-consumers, the conditions of the connection and transport agreement should be transparent, fair and known prior to the conclusion of the agreement. The suppliers are obliged to offer a model contract to the small-consumers. The sale of power to other types of consumers is not subject to a licence.

Is there any tariff or other regulation regarding power sales?

There are no boundaries to the tariffs for the supply of electricity. The prices of the supply are set by the market parties, based on the resultant of the electricity supply and electricity consumption. The market for electricity suppliers is fully liberalised, and the consumers are free to choose their own supplier. Owing to the competition that is created by liberalisation, energy suppliers have to keep their prices attractive, compared to the other suppliers. Based on the provisions of the Electricity Act, a supplier of electricity to small-consumers is obliged to set reasonable tariffs. The licence holder shall inform the ACM at least once per year regarding any changes to the tariffs.

Who determines the rates for sales of wholesale power and what standard does that entity apply?

The rates for sales of wholesale power, either on the day-ahead or intraday markets, are subject to market mechanisms. Owing to the fact that the number of producers and suppliers increased significantly over the past few years, the competition in the market has grown. This is a consequence of, among others, the investments in the development of generation facilities based on renewable energy sources. The increase in suppliers had a price lowering effect on the wholesale market.

The other side of the coin is that owing to an increase in the production of electricity, the costs relating to the management of the grid have risen, as grid enlargements are required to ensure reliable and safe transport of electricity. These additional costs are converted into the rates for the sale of wholesale power. Even price fluctuations on foreign markets, owing to the close link between the German and Dutch grid, may have influence on the rates.

To what extent are electricity utilities that sell power subject to public service obligations?

Suppliers of electricity to small-consumers, with a total maximum transmission value of less than or equal to 3x80A, is subject to a licence and certain terms and conditions as set out in the Electricity Act. Based on the provisions of the Electricity Act, the suppliers are obliged to offer a model contract to small-consumers (see question 18).