ACM does not see any major obstacles, but does see risks if network companies also act as heat network operators

At the request of the Dutch Ministry of Economic Affairs and Climate Policy (EZK), the Netherlands Authority for Consumers and Markets (ACM) has issued additional recommendations regarding the conditions under which network companies are allowed to install and manage heat networks if the heat over that network is supplied by a different heat company. These recommendations are a follow-up to previous recommendations to EZK issued by ACM in March and July 2020 about the possible role of network companies on the heat market.

In these recommendations, ACM also discusses the question of what requirements such a heat company should meet in order to make effective oversight possible if that company carries complete responsibility over the supply of heat, but is not responsible for the installation and management of the heat network it uses.

Safeguarding security of supply of electricity and natural gas

Network companies are part of a group of firms to which a system operator for electricity and/or natural gas also belongs. ACM has established that no European or national rules exist that prohibit network companies from also installing and managing heat networks.

However, installing and managing heat networks does carry risks to the security of supply of electricity and natural gas, as well as to the independence of the system operator. These risks may increase as the share of the heat activities within the network company increases. Furthermore, the risks associated with a network company installing and managing a heat network will depend on the way in which duties and responsibilities in the heat supply chain are allocated between the different market participants that are active in that chain. Depending on the magnitude and relative weight of those risks, ACM proposes several additional measures to consider, next to the provisions that are already included in the law, in order to safeguard security of supply and the independence of the system operator.

One of these possible additional measures is setting limits on the assurances and guarantees that network companies can give if those may affect the system operator. In addition, ACM also suggests creating statutory rules governing the procurement of heat by a heat-network operator for the purpose of executing its management duties.

Preventing preferential treatment

Furthermore, the system operator for electricity and natural gas could give the heat-network operator preferential treatment over competitors that also wish to install and manage the heat network. That could affect the playing field for heat-network management, and could negatively affect competition for this market. In order to prevent such situations, ACM recommends further fleshing out the existing prohibition against preferential treatment. In addition, ACM recommends making specific accounting rules and external audits mandatory for both heat-network operators and system operators for electricity and natural gas.

A single point of contact

In order to ensure that ACM will be able to conduct oversight effectively if a heat supplier outsources certain activities in the heat chain to third parties, ACM recommends placing responsibility over the entire process on a single party, and also to appoint a single point of contact. This party must ensure that all statutory duties and obligations are met.

The energy transition

The energy transition offers network companies and system operators opportunities for new activities. Society, too, asks more from system operators in the transition to alternative, sustainable sources of energy such as solar power, wind power, and heat. Over the next few years, ACM will keep a close watch on the trends and developments in the energy transition and on the role and duties of system operators in that transition.

See also

07-09-2020 Follow-up recommendations in connection with role of network companies acting as operators of heat networks (in Dutch)