Regulation

Regulation

In the Netherlands the Authority for Consumers and Markets (ACM) regulates the grid operators in the electricity sector and the gas sector because they, by nature, are monopolists. As a Dutch grid operator in both sectors Enexis Netbeheer is subject to the tariff regulation of the ACM, which is aimed at stimulating efficiency and ensuring that the quality of the network is good. The tariff regulation applies to a regulatory period, and the current regulatory period stretches five years, from 2017 until 2021. For the next regulatory period the consultation period already started. A new method decision for the period commencing 2022 is expected to be published in 2021.

Regulering_tabel_ENG_2020.01

The key parameters of the regulatory frameworks in the Netherlands are included in the table below. The allowed regulatory revenue reflects the costs of an efficient DSO and comprises the reimbursement of operating expenses, depreciation and a return on invested capital.

Regulatory framework for Dutch Distribution Network Operator (DSO)
Ownership DSO The Local public ownership (public by law)
Regulator Autoriteit Consument & Markt (ACM)
Regulatory period Current period is 5 years, from 2017 to 2022
Allowed investments Ex-post recognition in Regulated Asset Base (RAB). No maximum limit to investment
RAB calculation Historical cost, inflated and depreciated
Regulatory lag on investments Actual completed investments and depreciation reflected in RAB at the end of each regulatory period
Allowed costs Not applicable.  CPI minus yardstick productivity change are captured in the allowed customer tariffs, hence in total revenues.
Efficiency base and targets Yard-stick approach on cost and output performance against entire industry over time. Costs are re-set to the efficient level in the first year of each regulatory period with expected frontier shift (expected efficiency within the period) reflected through a glide path over the regulatory period
Volume risk Primarily capacity-based payments, no specific adjustments for volume risk
Allowed returns on invested capital WACC, real pre-tax, based on 10-year trailing average of benchmark bond yields
WACC parameters review At the end of preceding regulatory period