ACM issues recommendations regarding the bill for the Dutch Collective Heat Act

As the intended regulator, the Netherlands Authority for Consumers and Markets (ACM) has assessed whether the bill for the Dutch Collective Heat Act (in Dutch: Wet collectieve warmte, WCW) is practically feasible. ACM is positive about the bill. This law will contribute to the energy transition and provide better protection for heat users than the current Dutch Heat Act (in Dutch: Warmtewet). ACM does consider however that important elements of the bill should be changed to improve its enforceability. ACM has therefore issued a number of recommendations, for example, in the areas of tariff regulation, security of supply, and the assessment of new heat companies.

Recommendations

On the basis of its analysis, the so-called feasibility and enforceability test (UHT), ACM has concluded that the bill is feasible and enforceable, provided that the following elements in the WCW are changed:

• Under the bill, ACM would no longer need to set maximum tariffs for heat on the basis of the natural-gas price, but the tariffs would be based on the actual costs that heat suppliers incur. ACM views this positively, because this new cost-based system is more logical and more explicable to heat users. However, ACM does consider it to be important that consumers be protected against extremely high tariffs under this cost-based system. For this reason, ACM recommends that the legislature adopts additional measures.
• To ensure that heat users always and under all circumstances are delivered heat, a “Decision on the security of heat supply” should be adopted. Such a decision will stipulate what steps should be taken if a heat company goes bankrupt or is on the verge of bankruptcy.
• ACM should assess all heat companies before they become active as a heat company. This would prevent heat companies that do not have their business operations in order, from becoming active. This current bill includes only such an assessment for large heat companies. ACM recommends that it is given the option to assess suppliers with smaller heat networks in advance as well.

Consumer protection

The new law offers better protection for heat users, contains improvements with regard to disruptions in the supply of heat, and provides more clarity on the applicable rules. In addition, the bill ensures that the maximum heat tariffs are no longer set on the basis of the natural-gas price, but on the actual costs that heat suppliers incur. More and more households will be connected to the heat network in the coming years. It is therefore important that consumers can rely on their heat supplier’s service and that the tariffs are a logical consequence of the costs that the heat company must incur.

Aim of the bill

The Dutch Collective Heat Act (WCW) will replace the current Dutch Heat Act. The aim of this new law is to facilitate the development of new heat networks and thus stimulate the energy transition. ACM hopes that the legislative process proceeds as quickly as possible so that the new law is quickly in place. This would benefit the heat companies and investors as well as heat users. Willingness to invest on the part of heat companies, public market participants, and private investors is dependent on providing clarity on the new rules applicable to them, as soon as possible.

More information

Parliamentary letter on the progress of the bill for the Dutch Collective Heat Supply Act (in Dutch)