STROOM legislative proposal: better connection to the future energy market?

24-11-2014

What is STROOM?

Many changes are taking place in the energy market, for example smart meters, sustainable energy (including wind at sea), local production and European regulations. The current Dutch Electricity Act and Dutch Gas Act are being combined into one law to ensure that the legislation is also aligned to these changes. This transition is being implemented in the STROOM project. But what steps will the STROOM project take to achieve a better connection to the future energy market?

In 2011, the Ministry of Economic Affairs launched the legislative agenda known as STROOM. The aim of this project is to evaluate the Electricity and Gas Acts, implementing the 2011 Energy Report, the second Rutte cabinet agreement and the Energy Agreement concluded in 2013 by the Social and Economic Council of the Netherlands (SER).

STROOM stands for STReamlining, Optimising and Modernising.

  • Streamlining: bringing Dutch and European legislation into line with each other. The Dutch gas market is part of the European Internal Energy Market (IEM). The rules that are drafted in Brussels for the IEM are therefore also directly applicable to the Dutch market. In the interests of market parties, these rules need to be adopted (by all member states) as seamlessly as possible. The current Electricity and Gas Act is still focussing on the liberalisation phase.
  • Optimising: Following the evaluation of the Electricity and Gas Act performed in 2012 (by the Dutch Authority for Consumers & Markets (ACM)) consideration was given to how administrative burdens for market parties, government and regulator could be alleviated in the new legislation.
  • Modernising: implementing recently adopted legislation and generally preparing the legislation for a (sustainable) future. This means focussing more specifically on decentralised sustainable energy generation as agreed in the SER energy agreement.

Legislation review

The project ultimately resulted in a proposal to revise the legislation. This legislative proposal was published on the internet on 31 July 2014 for consultation purposes and deals with the substance of a few topics including organisation and duties for system operators and tariff regulation. The other subject areas contained by the Electricity and Gas Act have been transposed in a policy-neutral manner, which means that there is no change in their substance. Interested parties had until 8 September 2014 to make their views on this proposal known. The thinking behind this is that, with input from interested parties, the legislative proposal will be properly aligned to the energy market.

The new Electricity and Gas Act will now represent the framework of the legislation more than the current Gas Act. The contents of the act will be defined in greater detail by means of an order in council (AMvB). This order in council will be developed over the coming months and is expected to be finalised by early 2015. The aim is to submit the legislative proposal to the Dutch Lower Chamber during the first half of 2015 so that it can be effective from 1 January 2016.

What is actually changing?

Because many of the chapters from the (current) Gas Act are not affected by the new legislative proposal, in many areas there are no substantive changes. For those chapters, however, provisions from the (current) Electricity Act and (current) Gas Act are combined as far as possible, in areas such as consumer protection, programme responsibility and implementation of and supervision of the law. As the new legislative proposal consists of a framework act with an underlying order in council, each party should not look at the act alone but should also study more closely the detailed rules laid down in the order in council.

The chapters relating to the role, duties and competences of system operators (regional and national) have, in particular, been adapted as regards content.  Some aspects that may also affect companies and private individuals:

  • If an area is designated as being ‘all electric’, then a (gas) system operator is no longer obliged to provide connections or transport in that area. This was already provided for in an order in council but is laid down more clearly in the new act.
  • Another change relates to how gas connections for large-scale connections are carried out. This responsibility will be placed with the transmission system operator again, due to safety aspects and gas quality aspects. This shift in responsibility had been requested by large-scale customers.

Focal points

Given the current gas market developments, GasTerra endorses the need for modernising the Electricity and Gas Act. As a member of Energy Netherlands (VEN), GasTerra has already reacted against the restrictions to objecting to ACM code decisions (these are the decisions responsible for setting transport tariffs). The substance of this topic has not yet been addressed in the current legislative proposal. This will take place in the next phase of the STROOM process (due to start in summer 2015). It will then be important for market parties to keep an eye on the exact contents of the legislative proposal concerning this topic.

More detailed rules than those contained in the current Gas Act are also being set out in an order in council. The contents of this order in council are being defined at present, leading to uncertainty about the exact contents of the new law.