ACM to conduct additional investigation into the financial returns of several heat suppliers
Over the next few months, the Netherlands Authority for Consumers and Markets (ACM) will conduct an additional investigation into the financial returns of several heat suppliers. Households that are connected to a heat network cannot choose their own heat supplier. That is why ACM finds it important that heat consumers are protected well against unreasonably high rates charged by their suppliers. In its additional investigation, ACM will initially focus on five heat suppliers that realize high financial returns.
In its Financial-return Monitor, ACM has compiled an overview of the financial returns of all 31 licensed heat suppliers earned in 2023. ACM’s Financial-return Monitor has revealed that the financial returns differed tremendously among heat suppliers in 2023, ranging from a negative return of 22 percent to a positive return of 21 percent. In order to be able to interpret these financial returns better, ACM has requested additional information from all licensed heat suppliers. On the basis of this additional information, ACM will decide which suppliers will be included in the additional investigation. The Financial-return Monitor is in part based on expected returns. In addition, the monitor does not sufficiently distinguish between the supply of heat to large-scale users and small-scale users, which means that ACM has too little information to determine a financial return for small-scale users only.
In order to protect heat consumers against unreasonably high rates, ACM each year sets maximum rates. These maximum rates apply to all households and other small-scale users that are connected to a heat network. However, these maximum rates do not apply to large-scale users such as large companies that are connected to a heat network. The Dutch Heat Act stipulates that ACM must base these maximum rates on the natural-gas price on January 1 of the upcoming year. This is called the natural-gas reference price or the no-more-than-otherwise principle (in Dutch: niet-meer-dan-anders principe). As a result of this mandatory link with the natural-gas price, there is no direct relationship between the maximum rate set by ACM and the costs of suppliers. Heat suppliers cannot use these maximum rates to earn unreasonably high profits.
Call for increased transparency among suppliers
ACM has called on heat suppliers several times not to raise their prices unnecessarily, and to explain properly to their customers how prices are formed. In addition, ACM has already argued for a while now that heat suppliers should be transparent about their costs and revenues, and about their financial returns. ACM sees that some heat suppliers do become more and more transparent in this area, and finds that a positive development. ACM cannot force heat suppliers to do so, and, under current rules and regulations, cannot publish the financial returns of individual suppliers in the Financial-returns Monitor. In a technical briefing in the Dutch House of Representatives on April 17, 2024, ACM drew attention to this issue.
However, current rules and regulations do allow ACM to publish the average return of all 31 licensed heat suppliers. The average return in 2023 was 1.02 percent (ranging from -22 percent to +21 percent). This average return has little meaning since there are enormous differences between the returns of the different suppliers. The heat sector is populated by different types of companies with many different types of heat networks. Financial returns vary greatly per heat network and per supplier. Constructing a new heat network is a major investment, which any supplier would need to recoup over a longer period of time.