ACM sets maximum heat tariffs, taking into account the price cap
In 2023, most of the households that are connected to heat networks will pay less than the current maximum heat tariff. That is because heat consumers, too, will benefit from the price cap announced by the Dutch cabinet. For households that consume more than the price cap’s consumption threshold, the maximum tariff will go up. Heat suppliers must keep their tariffs below the maximum tariff set by the Netherlands Authority for Consumers and Markets (ACM).
An overwhelming majority of households (70 to 80 percent) consumes less than 37 GJ per year. These households will pay 47.38 euros per GJ (including VAT) in 2023 because of the price cap. Households that consume more than the upper threshold of 37 GJ will pay no more than 90.91 euro per GJ for the consumption above that volume threshold. An average household with an annual heat consumption of 35 GJ paid up to 2.542 euro in 2022. In 2023, they will pay up to 2.380 euros, which is a difference of -6 percent. This may differ for households that paid less than the maximum tariff in 2022.
The Dutch Heat Act stipulates that ACM must set the maximum heat tariffs on the basis of the natural-gas price of 1 January. That link between the heat tariffs and the natural-gas price is called the ‘no-more-than-otherwise’ principle (in Dutch: niet meer dan anders) or the ‘natural-gas reference’. The rationale behind that principle is that heat consumers cannot pay more for their heating than comparable households that have natural-gas-based heating. In previous years, the maximum tariff was calculated using the average tariff of a one-year fixed-rate contract. This is not possible right now, since no fixed-rate contracts are offered at the moment, which means an alternative method must be used. For the consumption above the volume threshold of 37 GJ, ACM will use a price based on the price on the wholesale market for natural gas (TTF CAL 2023).
Manon Leijten, Member of Board of ACM, explains: “It is essential that the legislature breaks that mandatory link with the natural-gas price as soon as possible. ACM will then be able to set the maximum heat tariffs on the basis of the actual costs that heat suppliers incur. That is important, first of all, for all households that are currently connected to heat networks, and it is also important for consumer confidence. Since we need to move away from natural gas as part of the energy transition, more and more households will get connected to heat networks over the next few years. That will only succeed if consumers can be confident that the tariffs are reasonable.”
Heat suppliers cannot use the maximum tariffs set by ACM to earn excess profits. That is why, this year too, ACM is expressly calling on heat suppliers to exercise restraint in increasing their tariffs if such is not necessary for covering the increased costs for natural gas. If the high natural-gas prices significantly affect the costs of heat suppliers, it may be necessary to increase their tariffs to the maximum tariffs. ACM finds it important that heat suppliers are transparent about this towards their customers, and will continue to keep a close watch on the tariffs of heat suppliers in 2023 too. If necessary, ACM will launch in-depth investigations into the cause of any tariff increases. Earlier this year, an analysis revealed that heat suppliers remained, on average, 18% below the maximum tariffs set by ACM.
In early 2023, ACM also expects to establish a return assessment for heat suppliers. With such return assessments, ACM can assess the returns of individual heat suppliers, and also take action if it turns out that a supplier earns too high a return. The return assessment is a temporary measure until the Dutch legislature has granted ACM powers to set the maximum heat tariffs on the basis of the necessary costs and a reasonable return.
More information:
- 2023 heat tariffs (in Dutch)
- How does ACM set the heat tariffs? (in Dutch)