Last week it became known that the Dutch House of Representatives [Tweede Kamer] wants the natural gas-powered systems in its quarters at the Binnenhof to be replaced with more sustainable alternatives during the Binnenhof’s renovation. This followed an earlier announcement that consumers must make the switch to sustainable heat pumps as quickly as possible. All of these plans spring from the National Energy Agreement, the initial approach for which was revealed by the Dutch Minister of Economic Affairs and Climate Policy, Eric Wiebes, in February. Wiebes wants all stakeholders to mobilise to achieve the climate objectives together.
But even before the ink on this ambitious, carefully considered plan was dry, the Netherlands Authority for Consumers and Markets (ACM) decided to forge its own path. Not because it considers the subject matter unimportant: in February, the ACM named the energy transition as one of its four focus areas for 2018 and 2019. The real reason seems to be short-sightedness, with just a hint of bureaucracy.
What was going on? In January, the ACM rejected an enforcement request submitted by Heijmans, a major construction company in the Netherlands. Heijmans had submitted that request after it discovered that the fee for the mandatory heating-grid connection of houses they were building in the Municipality of Dordrecht was five times higher than the fee prescribed by law. The company responsible for those connections – HVC Energie B.V. – had previously obtained the exclusive rights to those connections from the Municipality of Dordrecht. For Heijmans, the issue was clear: HVC, as the monopolist in control of heating connections in Dordrecht, was abusing its power by imposing these excessive fees.
The issue was clear to the ACM as well. The request was dismissed without a substantive review, based on the following arguments (briefly summarised): few consumers were affected and any benefit to them resulting from an investigation would not justify the time and trouble such an investigation would involve. The societal interest at stake, according to the ACM, was insignificant.
The ACM’s decision is disappointing, in light of both the National Energy Agreement and the ACM’s own focus areas, since this case makes it clear that the success of the energy transition – and the achievement of environmental targets – will be impossible without effective competition. In other words: if monopolists are permitted to charge high fees for their share of the energy transition – such as the connection to the heating grid – the transition will become unaffordable. It is precisely at the beginning of the transition process that society has a significant interest in clarification concerning the prerequisites that apply in these situations.
The fact that the efforts would be disproportionate to the results exposes a bureaucratic character that the implementation of a plan as ambitious as the energy transition needs like a fish needs a bicycle. In addition: with just one investigation into HVC’s alleged abuse of power the ACM could have set an example for the future – or in any case for the rest of the 200,000 homes and other buildings that will have to be switched off natural gas each year.
But even more importantly: by devoting its full attention to this case, the ACM could have made it clear to everyone that it is aware of its role and responsibility in the energy transition. It could also have set a good example for the other stakeholders – governments, consumers, and businesses – which might have inspired them to do the same, and which would have bolstered mutual cooperation and, in turn, the related negotiations.
We must hope that others will not follow the ACM’s example. Everyone involved in the energy transition must acknowledge that sound competition is absolutely essential to its success.