Regulatory developments in 2023

The most important regulatory development in 2023 was the judgment by the Dutch Trade and Industry Appeals Tribunal (CBb) in the appeal proceedings of the joint network operators against the current method decisions for regional gas and electricity network operators for the period 2022 to 2026 inclusive.

In addition, the ACM concluded in 2023 that retrospective calculation of the costs of network losses for both electricity and gas will in any case be required for the years 2022 to 2024 inclusive.

Appeal proceedings for method decisions

The network operators had launched appeals against the method decisions for regional gas and electricity network operators, because the network operators believe that more adjustments have become necessary in addition to the measures already planned, and this should lead to higher income.

The CBb delivered its judgment in this case on 4 July 2023. Its conclusion was that both method decisions, for electricity and for gas, should be nullified. The ACM would be required to make new decisions, basing the initial income for the electricity method decision on the actual cost level in 2021 rather than the estimated cost level. The ACM should also change the way in which it estimated the productivity development of the regional network operators, taking the consequences of investments due to the energy transition more into account.

In addition, the CBb also delivered a positive judgment on a few of the network operators’ grounds for appeal regarding the WACC. In the new method decisions for both electricity and gas, the ACM will need to include a minimum value of 0.5% for the risk-free interest rate.

On 21 December, the ACM published the modified method decisions incorporating the CBb judgment. In the spring of 2024, the ACM will calculate the financial effects of these in the x-factor decisions for each network operator.

As this will lead to considerable additional permitted income for the network operators, the ACM has already incorporated an advance in the tariffs for 2024. This advance is €187 million for Liander.

Regulation in the longer term

The ACM and the network operators already initiated a joint process in 2022 to determine the long-term regulatory method. The energy transition signifies a break in the trend of network operator cost developments and raises the question of which requirements a regulatory method should meet when it comes to setting permitted income and tariffs.

The ACM conducted a consultation in 2023 into which tariff regulation method would best suit the energy transition. Companies, municipalities, interest groups, experts and network operators recognise the importance of the energy transition and agree that network operators will need to be given more financial scope to make all the required investments over the next few years. The ACM is expected to outline the main aspects of the draft method in 2024, after which the new method decisions will be determined for the period from 2027 onwards no later than in 2026.

Together with the other network operators, Liander indicated during this process that the focus should be moved to the social challenge of the energy transition and ways to tackle it.