(November 2, 1998) Electricity companies in the Netherlands will be allowed to pass on the costs of nonprofitable projects to their customers, according to a proposal by Minister of Economic Affairs Annemarie Jorritsma.
(501.4943) WISE Amsterdam - Minister Jorritsma and the electricity utilities have reached a provisional agreement on October 14 about the inclusion of stranded costs in electricity prices. The Dutch government, the Dutch parliament and the European Commission have still to approve the deal. Jorritsma has allowed the utilities to introduce a special levy with a maximum of one Dutch cent (0.5 US cent) per KWh. This levy is contrary to the principle of free competition and therefore European permission is needed. Utilities claimed amounts of over Fl 10 billion (US$5.1 billion) of unprofitable investments, Jorrisma reported to the Dutch parliament. She could not (or would not?) not yet reveal the amount agreed upon.
The unprofitable investments of the Dutch utilities include import contracts with the French utility Electricite de France (EdF). The Netherlands imported 17% of its electricity consumption in 1997, although there was a 100% overcapacity in installed production capacity. The EdF export contracts to the Netherlands amounted to 400 MW annually. As reported earlier, the EdF also incurred a loss by exporting electricity (see WISE NC 497.In brief: "EdF: import to maintain export of electricity"). So if both sides incurred losses, why not cancel the EdF export- contracts to the Netherlands and also to the other countries? Cancelling the contract with the EdF would be more profitable for the EdF, for the Dutch utilities and for Dutch consumers.
Inclusion of these stranded costs into a levy to all customers should not be allowed: for Dutch consumers, it would mean subsidizing French nuclear power. Utilities themselves should pay for their losses and not pass these on to their customers. Liberalization of the energy market in this way is not profitable for customers but only for utilities.
Sources:
- Het Financiele Dagblad (Nl), 15 October 1998
- Annual Report 1997, SEP
Contact: WISE Amsterdam