Regulation of electricity utilities – sales of power

Approval to sell power

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

A regional supply licence is required for the sale of power to end users in each region. These supply licences are granted in Flanders, Wallonia and Brussels by the Flemish Regulator for Electricity and Gas (VREG), the Walloon Commission for Energy (CWaPE) and the Brussels Energy Minister respectively. Any person wanting to perform supply activities in Belgium must therefore obtain licences in all three regions. In all three regions, the supply licences are valid for an indefinite period. The laws of each region stipulate the exact licence requirements, the procedure, the reporting obligations and the grounds for suspension or revocation of the licence.

In Flanders, suppliers holding a licence granted by another regulator or in another EU member state are exempt from the obligation to obtain a separate licence in Flanders. In addition, no supply licence is needed for the supply of green power or electricity generated by a qualitative CHP facility through a direct line (an authorisation may still be required for the construction of a new direct line).

If an end user has a direct connection to the federal transmission system, a federal supply licence is also required to supply power to it.

Besides these general licences, Walloon and Brussels legislation provides for specific licences: a licence for the supply of 100 per cent renewable energy (Brussels-Capital region), a licence limited to a capped capacity, a licence limited to certain types of clients or to a certain area and a licence limited to ensuring a grid user’s own supply (Wallonia).

Power sales tariffs

Is there any tariff or other regulation regarding power sales?

The price of electricity is, in principle, based on market mechanisms. However, both federal and regional law may intervene in the sale of electricity.

The federal Economy Minister may impose maximum prices for the supply of electricity to end users and protected clients.

Federal law further provides that an electricity supplier must objectively justify its prices in comparison to its costs. In that framework, CREG has a general mission to monitor electricity prices but cannot (yet) take binding enforcement actions against suppliers. Furthermore, the law sets out a package of measures regarding the variable prices charged for the supply of electricity to households and SMEs.

The sale of electricity to household consumers is also governed by regional legislation. These regional laws determine, among other things, mandatory provisions in supply contracts and invoices, such as those dealing with minimum notice periods for termination, consumer protection, change of supplier and dispute resolution.

The Brussels legislation also enables the Commission for Energy Regulation in the Brussels-Capital region (Brugel) to set up a progressive pricing system for electricity.

More generally, power suppliers must also comply with the rules set out in the Code of Economic Law (the ‘CEL’), especially regarding unfair commercial practices, distance selling or publicity, and the new version of the Consumer Agreement (‘the consumer in a liberalised electricity and gas market’) and the related Code of Conduct. This industry wide agreement aims to protect consumers against abusive practices developed and misleading information given by suppliers.

Rates for wholesale of power

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

Subject to rules curtailing abusive market behaviour, power prices on the wholesale electricity markets are based on market mechanisms. As explained in question 19, the federal Economy Minister may impose maximum prices for the supply of electricity to end users.

Public service obligations

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

Regional legislation sets out public service obligations for DSOs and electricity suppliers.

These public service obligations vary from one region to another. As a rule, electricity suppliers must ensure the regularity and quality of the electricity supply. Besides this general public service obligation, the federal and regional legislators impose public service obligations on suppliers aimed at the protection of vulnerable consumers (eg, providing for specific procedures in the event of payment problems encountered by household consumers), rational use of energy, protection of the environment and, in particular, promotion of renewable energy (eg, green certificates).

Other intermediaries, such as producers, must also abide by certain public service obligations, some of which are linked to the security of electricity supply (ie, the provision of certain services to be contracted by the network operators).

The supplier of last resort is the relevant DSO (although in Flanders there is no legal provision in this respect, yet).