Minority Privitisation of Gasunie and TenneT
On November 16 2011 the Netherlands minister of economic affairs, agriculture and innovation sent a letter to Parliament announcing four important amendments to the Electricity Act 1998 and the Gas Act.
The proposed amendments are the elaborations of the Energy Report 2011 published in June 2011, to ‘streamline’ and ‘modernise’ the Dutch energy legislation package.
One of the more eye-catching legislative proposals is to amend both the Electricity Act 1998 and the Gas Act to facilitate the minority privatisation of the two respective transmission system operators (TSOs), Gasunie (its subsidiary GTS) and TenneT. The minister is to issue a policy letter towards the end of 2011 in which he will explain the starting points of and the guidelines for the privatisation. The bill is not expected to be sent to Parliament before mid-2012.
The minister then discussed the possibility of a legislative proposal on an obligatory fixed share of biomass (currently 10%) in the fuel mix of coal-fired power plants. At present, the need for such legislation is still under review and the minister expects to be able provide more information to Parliament in Spring 2012.
The minister also announced a bill dealing with, among other things: (a) natural gas composition; (b) self-supply for small end consumers (including netting behind the connection or meter); and (c) investing in networks to ensure the security of supply and the incorporation of sustainable energy. This bill is expected to be published in mid-2012.
The last amendment announced (but certainly not the least), is the proposal to merge the Electricity Act and the Gas Act into a single act. This will be a considerable enterprise in view of the overlaps and differences between the two regulatory regimes. To this end, the energy regulator is currently assessing the existing legislation to examine how the pieces of legislation can be merged. The outcome of this assessment is expected in early 2012, with the bill to be published not before the end of 2012.
The minister stipulates that this package of four initiatives must be regarded separately from current and future legislative proposals implementing EU legislation and regulations. Also, he indicated that the 'green deals' that he has signed with various market parties in order to support sustainable energy initiatives may require legislative amendments. The ‘green deals’ are covenants between the state and market parties in which the state commits itself to limit practical and administrative barriers to sustainable initiatives.
Commentary – Gasunie privatisation
We point out that the current Gas Act does not itself forbid (partial) privatisation of GTS. In fact, the acts specifically states that the provisions in the Gas Act that determine the public ownership of both network operators and gas networks, do not regard the TSO for gas, GTS. In other words, the Gas Act does not need to be amended to allow for a privatisation of GTS. This does not mean, however, that privatisation of GTS can be achieved at this moment without any further procedural or political ‘hurdles’. The minister of finance controls all state participations. In a letter to Parliament on state participations, sent by the minister of finance in 2008, it was announced that the Second Chamber of Parliament will be informed in advance of any contemplated privatisation of GTS. This promise by the minister of finance, effectively, has given Parliament a say in the privatisation process (the eligible parties, the form, the timing), for which there is (currently) no statutory basis.
We will await Christmas and gladly inform you further as soon as the minister sends his announced policy letter.
On the authors
Roland de Vlam: Experienced energy lawyer at Loyens & Loeff, active in all aspects of the energy sector, including E&P, (de)centralised (sustainable) production, regulated connectivity and transport and sustainable building. Roland has acquired a strong reputation for his energy regulatory and mining law expertise and is also known as an ‘excellent energy litigator’.
Max Oosterhuis: Head of the Loyens & Loeff Energy Team. He is recognized as one of the leading energy lawyers in the Netherlands and combines transaction skills and expertise of all relevant fields of the law that apply to the energy sector.
On the Loyens & Loeff Energy Team
Loyens & Loeff has a leading full-service energy practice in the Netherlands, advising on corporate, regulatory and tax matters for key players in the industry. Our energy practice we have divided our energy expertise into three sub teams in which specialists from different fields work closely together. The exploration & production team advises on all legal and tax aspects related to activities concerning oil and gas exploration, production and storage. Activities that concern the trade, transport and supply of gas, generation and transport of electricity and related products and services are covered by members of the Power & Utilities team. In cases where the activities have a direct bearing on sustainability, this is the domain of the NewEnergy team
For further information please contact Roland de Vlam or Max Oosterhuis at Loyens & Loeff NV by telephone (+31 20 578 5785), fax (+31 20 578 5800) or email (roland.de.vlam@loyensloeff.com or max.oosterhuis@loyensloeff.com).