Stek successful for heat supply sector in appeal against tariff regulation

Stek represents the heat supply companies and their representative organisation Energie-Nederland in an appeal before the Administrative High Court for Trade and Industry (CBb) against the tariff decision heat suppliers 2020 (Tarievenbesluit warmteleveranciers 2020) of the Authority for Consumers and Markets (ACM). The main point of the appeal is that ACM has not based the weighted average cost of capital (WACC) in the maximum rental rates for delivery sets on the actual average cost of debt of the heat suppliers. ACM argued that its duty to base the WACC on a customary reasonable return means that it has to estimate the cost of debt on the basis of an efficiently financed company with a similar risk profile, in the same manner als in other sectors with tariff regulation, such as the electricity and gas sectors.

By interim judgement of 26 April 2022 CBb sided with Energie-Nederland cs that the context of the heat sector is different from the electricity and gas sectors and that the manner in which ACM set the cost of debt in the WACC is at odds with the intention of the legislature that heat networks must be able to grow and leads to the risk that smaller heat supply companies will disappear. In the interim judgement CBb orders ACM to take a new decision no later than 26 October 2022 in which the WACC is based on the actual average cost of debt. This will apply to the tariff decisions for 2020 and onwards.

Click here for the press release of CBb and the interim judgment (in Dutch).