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Study: no quantitative justification for the volume correction scheme (VCR)

A study commissioned by the Netherlands Authority for Consumers and Markets (ACM) has revealed that the volume correction scheme (VCR), an additional discount on the transmission prices for large-scale users that continuously consume large volumes of electricity, no longer seems justified. Large-scale users that continuously consume electricity (meaning with few consumption peaks) cause fewer costs for system operators, but this upside has already been included in the current tariff methodology since peak consumption is more expensive. That is why, from a cost perspective, there is no justification for granting the VCR also, according to the study carried out by engineering consultancy firm Royal HaskoningDHV.

Moreover, the additional discount scheme does not fit with the increasing need for flexibility as a result of the energy transition and the current congestion problems on the grid. That is another reason as to why ACM believes that continuation of this scheme is undesirable. The VCR rewards users with stable consumption patterns, and, as such, does not stimulate large-scale users to change their consumption to, for example, the availability of sustainable energy from wind turbines and solar panels, which is something that will actually become increasingly necessary in the energy transition. That is why ACM plans to discontinue the VCR. The study has been published on the website for consultation. ACM will make a final decision on the scheme after the public consultation.

The current discount for large-scale users was laid down in the Dutch Electricity Act in 2014. Under the VCR, several dozens of large-scale users receive discounts on the volumes that system operators charge for the transmission of electricity. ACM decided to have a study conducted into the VCR after a 2020 ruling of the Court of Justice of the European Union had revealed that the national energy regulators have the power to allocate grid costs. According to the Court of Justice, national legislatures cannot set rules for matters over which the national regulator has jurisdiction under European laws. In the Netherlands, that regulator is ACM. On July 6, 2022, ACM already announced it could not enforce the discount scheme, if an external study did not show that the discount was necessary.

The legislature included the VCR in the Dutch Electricity Act after member states that border the Netherlands had implemented similar schemes. A substantive justification for introducing the scheme was the assumption that users that continuously consume large volumes of power cause relatively fewer costs than users that cause many consumption peaks. ACM commissioned a study from Royal HaskoningDHV to look into the question of whether this assumption was correct, and with the aim to answer the question of whether, on the basis of the system operation costs, a separate tariff for the group of large-scale users in question was needed. It has now been revealed that the researchers were not able to find a justification for the VCR on the basis of system operation costs.

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