Energy & Natural Resources
The Offshore Wind Bill has passed its first reading, during which the minister of economic affairs elaborated on a letter in which the subsidy costs for offshore wind were recalculated at €12 billion instead of €18 billion. Although the speed and determination with which the bill has progressed are laudable, many aspects require clarification to give investors and financers comfort to engage in such projects.
The minister of economic affairs recently gave public consent to the amended Groningen gas production plan proposed by Nederlandse Aardolie Maatschappij (NAM). The proposed production plan takes into account the results of further research that the state supervisor of mines and NAM conducted on the relation between gas production and the recent earthquakes.
A legislative proposal for offshore wind has been submitted to Parliament. The bill implements an important part of the roadmap for reaching the targets set in the Energy Agreement. Among other things, the roadmap provides for a new roll-out schedule of 700 megawatts of offshore wind capacity per year for five consecutive years and a new combined application procedure for a licence and subsidies for renewable energy.
The advocate general of the Supreme Court has rendered his opinion on the 'unbundling' case, in which Essent, Eneco and Delta are seeking a judicial declaration that the Act on Independent Grid Operation is unlawful. The act requires the unbundling of integrated energy companies into an independent network operator and a commercial business for the production, trade and supply of electricity and gas.
Recent expert reports have indicated that gas production in the Groningen field has caused earthquakes in the Netherlands' northernmost province. In response to growing concern and public discontent, the minister of economic affairs announced measures to limit production from the field. However, the measures have been received with scepticism.
Parliament is discussing a bill that will introduce a 90% discount for large power consumers on their transport and system services tariffs. The measure is a response to the German transport tariff discounts for large industries. Large-scale consumers (at least 50 gigawatt hours a year), with at least 65% plant operationality will be entitled to a correction of up to 90% on their annual electricity offtake volumes.
The European Court of Justice has ruled on preliminary questions in a dispute between three Dutch energy companies – Essent, Eneco and Delta – and the state over the compatibility of Dutch energy law and the EU Treaty. The case will now be continued before the Netherlands Supreme Court.
The Dutch Heat Act has recently been published in the Bulletin of Act and Decrees. The Heat Act applies to the supply of heat to consumers. The overarching task imposed on suppliers of heat to consumers is to ensure the reliable supply of heat against reasonable conditions at a good service provision level.
The European Court of Justice recently held that a homeowner who had photovoltaic installations on the roof of his house was entitled to deduct input value added tax (VAT) on the purchase of the panels from output VAT to be calculated on his supplies of electricity to the grid. The ruling has led to parliamentary questions to the state secretary of finance on the consequences for Dutch electricity producing household end users.
In 2012 the Dutch Supreme Court referred to the European Court of Justice preliminary questions in a dispute between three Dutch energy companies and the Dutch state over the compatibility with the Treaty on the Functioning of the European Union of certain provisions in the Electricity Act 1998 and the Gas Act. Advocate General Niilo Jääskinen has now presented his legal opinion on these questions.
A new bill has recently been introduced that will bring legislation in the Netherlands in line with the EU Regulation on Energy Market Integrity and Transparency (REMIT). REMIT aims to counter insider trading and market manipulation and increase transparency in the wholesale markets for electricity and natural gas. The bill also grants new powers to the authorities and the courts to punish infringement.
A new decree provides further information with respect to the obligation to notify the minister of economic affairs, agriculture and innovation of a change of control over a production installation with a capacity of more than 250 megawatts or a company that operates such production installation, a liquefied natural gas installation or a liquefied natural gas company .
Energy was an important topic throughout the recent parliamentary election campaign, particularly the country's ability to reach EU targets for sustainable energy and carbon dioxide emissions. The coalition negotiations in the coming weeks will decide the energy policy for the next four years, and the parties' pre-election plans give some indication of the course that the Netherlands may follow.
The State Council recently ruled on the legitimacy of 11 Public Works Management Act permits granted in 2009 for the construction, operation and decommissioning of 11 wind parks. The State Council's judgment is a crucial step in the development of the offshore wind parks on the Dutch continental shelf.
There has been much discussion in the Netherlands on the feasibility of introducing a transport tariff payable by producers. A recent letter sent to Parliament indicates that the minister of economic affairs is considering two possibilities: either a producer's transport tariff for all producers (centralised and decentralised), or a transport tariff payable by centralised producers only (exempting local producers).
The government has released a bill that proposes certain amendments to implement proposals for the 2013 budget. Among these proposals are a number of measures intended to increase energy taxes, such as abolishing the existing exemption from coal tax for coal used for the generation of electricity in qualifying plants.
The Court of Cassation recently decided to ask the European Court of Justice preliminary questions regarding the Netherlands' mandatory legal ownership unbundling of energy networks, which has been fiercely debated for some years now. The proceedings may buy the remaining integrated companies time to roll out their preferred strategies on the matter.
In response to concerns raised in Parliament on the market position of Dutch large industry, the Dutch minister of economic affairs, agriculture and innovation has indicated that he will not allow exemptions, comparable to those in Germany, from transmission tariffs for large industrial consumers. The minister has brought the German exemption to the attention of the European Commission.
The minister of economic affairs, agriculture and innovation has announced four important amendments to the Electricity Act and the Gas Act. One of the legislative proposals is to amend both acts to facilitate the minority privatisation of the two transmission system operators, Gasunie and TenneT. The minister will issue a policy letter towards the end of 2011 explaining the starting points of and guidelines for the privatisation.
An act amending the Dutch Mining Act in order to implement the EU Carbon Storage Directive and the Ospar Decision on the storage of carbon dioxide streams in geological formations has been published in the State Bulletin of Laws. The act introduces a new licence for permanent carbon storage. Applicants must demonstrate their financial and technical capability for such activities and must submit a monitoring plan.
The Dutch Cabinet issued its annual Energy Report in June. A notable development is the government's intention to allow for gradual minority privatisation of the transmission system operators for electricity (TenneT) and gas (GTS). The Cabinet plans to allow cross-border participation in TenneT and GTS by foreign network operators that can demonstrate a similar level of unbundling in their operations in their home country.
The government has issued an act amending the Electricity Act 1998 and the Gas Act to improve market operations. The new act (re)introduces regulation of the metering market and introduces smart metering. Smart meters allow customers more insight into their energy consumption and may help to encourage energy saving measures.
From April 1 2011 the installation of gas connections on the gas transport network will be a regulated activity exclusively for network operators. The fitting of the connection point on the gas transport network has been deemed too dangerous to leave to the market. Therefore, this responsibility will become a statutory task for the network operator in the relevant area, against maximum tariffs set down by the energy regulator.
A new act amending the provisions on privatisation of the electricity and gas networks recently entered into force. The amendments stipulate that the ownership of a network shall rest, directly or indirectly, with the state. The changes are in response to a judgment of the Hague Court of Appeal earlier this year.
The energy regulator has published a decision laying down the new regulations on congestion management. On the basis of the new regulations, it is expected that it will be possible to build new power generation plants pending the time required for the expansion of the power network in congested areas.
A bill is currently before the Lower House in order to implement the EU Carbon Capture and Storage Directive by amending the Mining Act. The bill deals with the embedding of carbon dioxide storage and ensures that the application process for a permanent storage licence is accessible to all entities possessing the necessary capabilities.
The Second Chamber of Parliament recently accepted a bill to amend the Gas Act and the Electricity Act. The bill proposes numerous changes to the acts, including a new gas balancing regime that allows market parties to participate in the balancing of the gas system. The new concept of 'programme responsibility' will replace the existing role of shippers.
The minister of economic affairs recently proposed a bill to modify the Gas Act and the Electricity Act 1998. The bill includes, among other things, a new priority network access regime for sustainable electricity. The government wishes to ensure that priority access is granted to sustainable electricity in the event of a shortage of transport capacity on the electricity grid.
The Energy Chamber of the Competition Authority recently granted its first decision to exempt the owner of a private network from the statutory obligation to appoint a network operator since the judgment of the European Court of Justice in Citiworks. One of the conditions of the exemption is third-party access to such private network.
In a recent decision the Amsterdam Appeal Court ruled in a settlement agreement for a worldwide group of shareholders (excluding US shareholders), entered into by Shell with respect to the re-categorization of certain of its gas and oil reserves to be legally binding in and outside the Netherlands.
Parliament is considering a bill to amend the Gas Act and the Electricity Act 1998. The bill would amend the Small Field Policy, which aims to exploit the existing infrastructure to develop and mine efficiently and effectively the remaining gas reserves in the Netherlands and the Dutch part of the continental shelf.
The Energy Council of the Netherlands recently published an advisory letter to the minister of economic affairs on the impact of the credit crisis and subsequent recession on energy and climate policy. The council recommends nine measures to be taken this year. This update discusses the three most likely to dominate public debate in the coming months.
Three letters were recently sent to Parliament by the minister of finance and the minister of economic affairs which may have an impact on the tax position of oil and gas companies active in the Netherlands. This update summarizes the main aspects of the relevant announcements.
Parliamentary debate on Dutch energy-related issues is again focusing on the topic of ownership unbundling. The Lower House of Parliament recently adopted two motions that could have a significant effect on the unbundling process and on the future of public shareholding in energy companies. The minister of economic affairs has described how she will adjust government policy as a result of the motions.
The Netherlands Trade and Industry Appeals Tribunal has dismissed as unfounded an appeal by a Dutch association of large users of energy and water against a decision of the Ministry of Economic Affairs to exempt the Gate Terminal BV liquefied natural gas terminal from certain third-party access obligations contained in Sections 13, 14a and 15 of the Gas Act.
A recent bill to amend the Mining Act 2003 would allow the minister of economic affairs to reduce the area for which an exploration or production licence has been issued. The bill aims to optimize natural gas production from smaller (offshore) fields.
A bill for a new Drinking Water Act has recently passed the Lower House of Parliament. A key issue in the bill is a form of profit regulation to be imposed on the water companies. The minister has opted for a system of profit regulation whereby the operating results of the water companies are maximized by setting a cap on the premium that companies can charge to compensate their costs of capital.
The minister of economic affairs recently sent a bill to Parliament amending the 1998 Electricity Act, the Gas Act and the Mining Act in order to streamline the decision-making process for energy infrastructure projects. When the bill is adopted it will enter into force immediately, although this is expected to take at least another six months.
The new incentive scheme for sustainable energy is expected to become operational on April 1 2008. The Ministry of Economic Affairs recently sent various ministerial decrees to Parliament, providing the material implementation for this new programme which was launched in October 2007.
From January 1 2011 Dutch energy companies must be unbundled to comply with recent amendments to the Electricity and Gas Acts. Gas and electricity networks will be operated and owned by operators that are legally and economically independent from their former vertically integrated commercial group members. Energy companies will be split under strict regulatory supervision.