Fixed energy costs: why grid operator costs and energy tax keep rising

Anyone looking to reduce their energy costs almost always looks at the supply price. That is understandable, because it is the only part of the bill that is negotiated. But it is not the part that has risen fastest in recent years. The fixed components of the bill, the grid operator costs and the energy tax, are regulated, not negotiable and set again every year. The mechanism behind them is predictable; the level is not.

What your fixed energy costs consist of

A business energy bill breaks down into four blocks: the supply costs for the energy itself, the grid operator costs for transport, the taxes levied on those, and other items such as metering services. Only the first block moves with the market price. The rest is set by the regulator and the legislator. With a smaller connection, the share of grid operator costs and taxes in the total is relatively large; for an energy-intensive customer the supply component dominates. That share determines how much a tariff increase actually means for you.

Why grid operator costs are rising

The level of the grid operator costs is set by the Netherlands Authority for Consumers and Markets (ACM). Each year the ACM sets the maximum permitted tariffs per grid operator, within multi-year method decisions. Grid operators therefore do not set their own tariffs, and you cannot negotiate over them. Behind the annual increase in the transport tariffs for electricity are three mechanisms that recur every time:

• Increased purchase costs at national grid operator TenneT for transporting electricity over the national grid. Regional grid operators pass those costs on in their own tariffs.
• Retrospective settlement of earlier years. If the tariffs that were set turn out to have been too low or too high, the ACM settles that difference in the tariffs of later years. A jump in tariffs therefore does not always concern the current year alone.
• Increasing investment to make the energy grid future-proof. Grid operators recover that investment through the transport tariffs charged to you as a connected party.

These three mechanisms are at work again every year, in varying proportions. Exactly what the tariffs are for a specific year is published by the ACM and your grid operator in the tariff decisions for that year. For a budget, always work from those current decisions and not from last year’s tariffs.

Electrification is the cost driver beneath the tariffs

The reason so much investment is needed is that demand for electricity transport is increasing structurally. The electrification of buildings, transport and industry is driving a sharp rise in electricity consumption. On top of that, more and more is generated and stored decentrally: solar panels, charging points, heat pumps and batteries. To handle that increasing transport, the electricity grid has to be reinforced and expanded in many places.

Grid operators are jointly investing tens of billions of euros in this over the coming years. So this is not a one-off increase but a multi-year movement: as long as the grid is being reinforced and expanded, transport tariffs will remain under upward pressure. Grid congestion is the visible symptom of that; the tariffs are the bill.

Energy tax is shifting between gas and electricity

The energy tax has separate tariffs for gas and electricity, each with its own degressive bracket structure: the more you consume, the lower the tariff per unit in the higher brackets. The tariffs are set each year in the Tax Plan (Belastingplan).

The policy direction of recent years is a higher tax on gas against a lower tax on electricity, in order to make electrification more attractive than natural gas. For a company with a large gas demand, that is a structurally rising cost item. How the shift works out in a specific year depends on the Tax Plan for that year and on your own ratio between gas and electricity consumption. Always check the current tariffs for that; special schemes and exemptions for energy-intensive use are politically in motion.

What this asks of you

Grid operator costs and energy tax are not negotiable. That does not mean you have no influence over them, only that this influence does not lie with your supplier but with your own connection and consumption profile.

• With a large-consumer connection, the transport costs depend in part on your contracted transport capacity and on your highest measured peak. You pay for reserved capacity, even if you do not use it. Check whether your contracted capacity still matches what you actually draw.
• A single quarter-hour in which too much is running at once can fix the peak component for a longer period. That is visible in your own quarter-hour values.
• Because the energy tax is degressive, a saving per kWh or m³ yields less at higher consumption than at lower consumption. Calculate a saving measure using the bracket you are actually in, not an average tariff.
• Include the expected development of the fixed components in your budget. Anyone who budgets only the supply price is budgeting part of the bill.

What needs to be checked for your situation

How hard a tariff increase lands differs per connection, consumption profile and contract form. A fixed supply price does not protect you against an increase in the grid operator costs or the energy tax: those are passed on separately from it. That is one of the most common assumptions in energy budgets.

COMCAM places your quarter-hour values and connection data alongside the current tariffs, so that it becomes visible which part of your bill moves with the market and which part does not. Would you like to know what your cost structure looks like and where the room lies? Contact us.