Regulation results in reasonable return for Dutch transmission system operator TenneT
Regulation has enabled Dutch transmission system operator TenneT to recover its efficient costs and realize a reasonable return. These are the conclusions the Netherlands Competition Authority (NMa) comes to in a study into TenneT’s returns through 2010 on its regulated transmission and system services. In its regulatory regime (through 2010), the NMa uses a projected long-term average real return of 5.4 per cent. According to the NMa’s calculation methods, TenneT’s actual return in 2010 was 2.5 per cent on its regulated services. However, the NMa last year ruled that TenneT was still entitled to an additional compensation for the operational costs of the high-voltage grids for the period of 2008 through 2010. If that compensation were to be included in the returns over that period, the average real return would be 5.1 per cent on regulated services. Actual return over 2009 is 2.9 per cent, and 4.9 per cent adjusted for said compensation. The average return for 2006 through 2010 after adjustment is 5.6 per cent, compared with the NMa’s projected return of 5.4 per cent.
|
2006 |
2007 |
2008 |
2009 |
2010 |
Average |
|
|
Actual return |
8,4% |
7,6% |
5,4% |
2,9% |
2,5% |
4,5% |
|
Adjusted return |
8,4% |
7,6% |
4,9% |
4,9% |
5,1% |
5,6% |
Commercial return
The commercial return on regulated services over 2010 was negative: -3.5 per cent. There are two reasons. First, this return, too, is not adjusted for the abovementioned compensation. Second, a one-time write-down of €134 million is included, following a decision in which the NMa ruled that TenneT must bear part of the costs of past inefficient investments.
Future-proof regulation
The NMa looks at both realized returns and future returns. That is why, for the next regulatory period, it will be carrying out a study into the extent to which the current regulatory regime is future-proof. One of the regime’s key elements continues to be that TenneT must be able to realize a reasonable long-term return. This return cannot be too low, because TenneT must be able to make critical investments in the Netherlands, but, at the same time, it cannot be too high so that customers unnecessarily pay more.