The cabinet is spending tens of billions for the price cap planned to enter into force on 1 January 2023. Parliament members fear that unnecessary amounts of money will go to the energy companies because the government can not control what a reasonable margin is for the energy suppliers. Minister of Climate and Energy Rob Jetten asked the Dutch Authority for Consumers and Market (ACM) to determine a "reasonable margin" for energy suppliers, but the ACM unexpectedly returned the assignment. Pim Jansen, Associate Professor of Public Law at Erasmus School of Law, reacted to the ACM in het Financieele Dagblad (FD).
Minister Jetten asked the ACM for a recommendation for an objective and fact-based reasonable margin for energy suppliers that are subsidised for supplying energy under the price cap. The subsidy should cover the costs and a good margin for supplying electricity and gas, as far as the income under the price cap falls short.
The ACM concludes that it is impossible to meet the ministry's advice request. The main reason is that ACM determines reasonable margins based on historical data. The current market conditions do, however, divert strongly from the recent past. That is why the ACM is not equipped to determine a reasonable margin based on historical data of energy suppliers. The ACM has pointed out to Jetten that the ministry could determine a reasonable margin not based on historical data. However, this requires a political assessment.
According to Jansen, the ACM has specific permissions to guarantee the effectiveness of energy suppliers: “when a supplier calculates too much money on top of its costs, the ACM could ask for a price reduction. When this request is not met, the ACM could impose a maximum price.” However, the request of minister Jetten – a general reasonable margin for all energy suppliers – is not in line with what the ACM usually calculates, Jansen continues: “this system is already complex and time-consuming for a single company, so the request of minister Jetten to the ACM is even harder to execute because the ACM will have to obtain the information about costs and incomes of tens of energy suppliers.” Jansen also agrees with the material reservations of the ACM: “In advance, it is not clear how the reasonable costs of so-called effective business operations should be calculated. Especially in these times, since the current market conditions are not representative."
Conclusion: the ball is in minister Jetten's court again. In the meantime, Jetten proposes to compensate the energy companies based on the consumer price, at least for now, until 1 March 2023. At the same time, a third party is supposed to determine a reasonable margin. "However, this third party is not able to make political assessments of what is a reasonable margin", concludes Jansen.
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Click here for the entire article in het FD (in Dutch).
