Essent submits Unbundling Plan to Energy Board

The Unbundling Plan is an important step on the way to unbundle the ownership of Essent into a Production and Supply Company (PSC) and a Network Company (NWC). It describes the economic and legal frameworks of the ownership split. Essent submitted the Unbundling Plan to the Energy Board of the Dutch Competition Authority on 19 November.

The split in ownership, also known as group prohibition, is a result of the Independent Network Management Act (Dutch = WON), which came into force on 1 July. According to this act network managers on the one hand and producers, traders and suppliers of electricity and gas in The Netherlands on the other hand may no longer belong to the same (legal) group of companies.

Necessary steps

The Unbundling Plan explains how the split will be implemented, including the various steps necessary. This is made evident by presenting a comparison between the actual (financial and legal) situation on the reference date of 30 June 2008 and the “as if it had been split” situation at that same time. This is therefore quite emphatically a comparison at one specific moment, without any “view” to the future.

The Unbundling Plan also shows how the “fat” network manager was formed. Because the Independent Network Management Act moreover forbids costs concerned with the unbundling being passed on in tariffs, the Unbundling Plan also indicates how this will be observed.
The Independent Network Management Act includes the obligation that the Unbundling Plan be provided with a declaration by an “independent auditor” about the way in which the various demands posed by the act are complied with and about the accuracy of the figures used. At Essent, Ernst & Young fills the role of independent expert.

Advice

The Energy Board advises the Minister of Economic Affairs on the submitted Unbundling Plan. It is then up to the Minister to approve the plan. The Minister can if necessary give additional instructions on the way in which the split is carried out. This process takes a maximum of 20 weeks from the time of submission.

The process of operational splitting of the ownership at Essent is expected to be complete by the end of 2008; from that moment the two companies will in effect work separately. The splitting of ownership, as directed by the Independent Network Management Act, will be accomplished at the latest by 31 December 2010. The present shareholders will then no longer have one share in Essent, but a share in Essent N.V. (production and supply company and Essent Environment) and a share in the (new) network company. Until that time the two companies will operate under a financial holding, the Essent Group.

Published: 27 November 2008