NMa Fines Energy Companies

The Netherlands Competition Authority (NMa) has imposed fines on eight energy companies varying from EUR 10,000 to EUR 90,000 per company. It appears that these companies infringed the Electricity Act of 1998 in the summer of 2004. This involves the following companies: Eneco Energie (EUR 10,000), N.V. Nuon (EUR 25,000), N.V. ONS Energie (EUR 10,000), ONS CAI B.V. (EUR 10,000), EDF Trading Limited (EUR 90,000), Endesa S.A. (EUR 60,000), Vattenfall Trading GmbH (EUR 10,500), Aare Tessin AG für Elektriciteit (EUR 10,000).

NMa ensures the promotion of competition on the electricity market. The scarcity of import capacity on the three cross-border connections (interconnectors) therefore has to be divided fairly amongst the energy companies which wish to import electricity. If a party wishes to import electricity into the Netherlands, it is obliged to do so through the Amsterdam Power Exchange (APX), the Dutch electricity exchange. NMa has concluded that last year the eight energy companies did not comply with the obligation to offer a quantity of electricity for auction on APX which was equal to the cross-border transmission capacity which they had obtained earlier through the daily auction. G.J.L. Zijl, a member of the Executive Board of NMa, stated that the failure to offer the full quantity of electricity for auction is a serious infringement of the Electricity Act. "Import capacity is left unused which can no longer be used by other parties. As a result, the operation of market forces on the electricity market is obstructed," Mr Zijl emphasises. 'Another important reason is that foreign electricity is usually cheaper than Dutch electricity. The more foreign electricity the parties can import, the lower prices will be in the Netherlands. For this reason, NMa would like all the import capacity to actually be used," Mr Zijl explains.

In addition, part of NUON's fine relates to an infringement of the limit on the quantity of transmission capacity which may be acquired by each company on the cross-border grid. The capacity NUON acquired exceeded the permitted maximum of 400 MW. The Electricity Act stipulates this limit to ensure that one or several of the parties do not acquire all the import capacity for themselves, which would enable them to influence prices.

NMa may impose a maximum fine of 10% of the turnover of the company involved for infringements of the Electricity Act or the Gas Act. Since there was no malicious intent on the part of the companies involved, the fines imposed are relatively low.