TenneT must come up with concrete spending proposals regarding auction proceeds

Last year, Dutch transmission system operator TenneT received EUR 165 million through the auction of cross-border transmission capacity for electricity. This has been revealed by the Auction Proceeds Report, which is published by the Netherlands Authority for Consumers & Markets (ACM) today. In the past few years, too, TenneT earned considerable amounts of money from the auction of scarce capacity of cross-border connections, which has resulted in a total cash reserve of EUR 664 million now available to the company. These funds belong to consumers and companies, because they have indirectly raised this money through their energy bills. TenneT is required to return these funds. This can either be done by investing in projects that eliminate cross-border transmission problems, or by lowering tariffs. Lower tariffs of TenneT will ultimately be reflected in the electricity bills of all consumers and companies in the Netherlands. As the regulator, ACM wants TenneT to come up with concrete proposals for how it plans to spend these funds in the short term. Such proposals will be assessed and approved by ACM.

Electricity is traded in an international market. Large companies and traders buy electricity in other countries, or electricity is sold from the Netherlands to buyers in other countries. Sometimes, demand for cross-border trade exceeds the capacity of cross-border connections. In that case, TenneT has to auction that ‘scarce’ capacity, and sets the proceeds aside. These funds must be used, for example, for investments in new cables that can solve cross-border transmission problems. ACM last year already ordered TenneT to cut EUR 87 million from the 2014 tariffs, as it had not received any concrete investment plans.