On 7 July 2008, the Lower Chamber of Parliament enacted the Heat Act ("Warmtewet") with an absolute majority. As a consequence of the Act, it is the intention that both private consumers of heat and the environment will benefit, because (i) it will protect these consumers from high fees to be paid for distinct-heating and (ii) because remainder-heat of production facilities is stimulated to be reused from now on, which should lead to a decrease of CO2-emissions.

Background and goal

One of the main reasons to draw up the Heat Act, is insufficient protection for low-volume users against high fees and bad services offered by heat providers. In addition, industries will be encouraged to supply residual heat to consumers by being offered subsidies.

The Act

Heat Supply

In order to protect private consumers, various regulations have been adopted: any supply of heat to consumers (except for delivery of heat to less than 10 persons at a time, a delivery of less than 10,000 gigajoules of heat or a delivery of heat by a proprietor, in order to heat its own building) is obliged to obtain a licence.

The obtaining of such licence is subject to the Minister of Economic Affairs' permission. A person who already supplies heat at the date the Act enters into effect, obtains a licence by operation of law. The Minister of Economic Affairs may revoke the licence provided that the heat supply (by other suppliers) will continue to be against fair prices and conditions.

The licensee is obliged to supply sufficient heat in an trustworthy manner, and against fair prices and conditions. Said fair price must be based on the costs which are reasonably necessary for heat supply. If requested, the heat producer connected to the "heatgrid", is obliged to negotiate with the licensee about providing heat against fair prices and conditions. The maximum price of heat will be based on the integral costs a consumer would incur to acquire the equal quantity of heat when he made use of gas as energy source.

The Minister of Economic Affairs may exempt a supplier from the obligation to charge a reasonable price, provided however that the supplier can prove that, without such exemption, the supply of heat is loss-making while using a specific "heatgrid".

The Energy Chamber, the energy regulator, will supervise the compliance with the Heat Act. It is empowered to impose an order for incremental penalty payments if a supplier does not abide by the requirement to offer reasonable price and conditions. In addition, certain infringements of the Heat Act shall constitute economic offences.

Heat Production

A producer who provides "useful" heat which is available for supply to private consumers, is eligible for a subsidy. However, if in due course, it discharges the superfluous heat, a levy may be charged. The Act states that by governmental decree, the discharge of superfluous heat can be prohibited in the future. The subsidy scheme available to different categories of heat producers or production-installations, will be related to the volume of saved CO2 emissions.

The expected result

Implementation of the Heat Act should result in consumers and small and mid-sized companies to pay a reasonable price for heat and in any case not more than the set maximum price. In addition, imposing a levy on or prohibition of discharging cooling-water, could persuade companies to offer such cooling water to private consumers. The reduction of CO2 emissions as a result of the use of superfluous heat instead of producing new heat, can be considered as additional benefit.