Essent's response to the Royal Decree to Divide Energy Companies
Division creates a great deal of uncertainty about the future of Dutch energy companies and the energy supply in the Netherlands.
Last November, the Upper Chamber of the Dutch Parliament approved a law enacting a separation into two functional groups (transmission and supply), but the actual enforcement was suspended by a motion until there is a clear policy in Europe on this subject. The motion also stated that, if an energy company in the Netherlands does not perform as it should, is insufficiently transparent, does not allow equal access to networks or engages in foreign activities and/or alliances to endanger the independent management of networks, the division could still be accelerated by means of a Royal Decree.
The minister has today sent that Royal Decree for assessment to the Upper and Lower Chambers of the Dutch Parliament because they evidently believe that energy companies have not complied with the conditions in the motion.
This view is odd, as nothing has changed since passage of the draft legislation. It has long been known that Essent and Nuon were discussing a merger at the time that the draft legislation was passed. The goal of the merger is the creation of a strong Dutch energy company capable of playing a role in the evolving Northwest European energy market. The possible takeover of Indaver by Della was also well-known at the time.
More strongly still, it is only the exonerating Office of Energy Regulation (DTe) study that has actually been made public since the passage of the draft legislation. This study indicates that the companies have entirely complied with the legislation, that no cross subsidies are occurring and that the takeover by the Belgian Indaver poses no threat at all to networks.
Politicians clearly feel that independent network management can only be 100% guaranteed if the energy companies are segregated into two functional groups. But 100% certainty is not even guaranteed by this split, as the Office of Energy Regulation also acknowledges. In fact, division creates many large uncertainties that are extremely relevant to the affordable, reliable and sustainable provision of energy in the Netherlands.
We have always stated that division would impose a big handicap on us in relation to the competition in surrounding countries. After all, they do not have to be split up and retain all the advantages of large integrated energy conglomerates.
Division therefore creates a great deal of uncertainty about the future of Dutch energy companies and the energy supply in the Netherlands. Dutch energy companies will fall into the hands of foreign-based energy corporations that are, in fact, integrated. This would also have consequences for plans in the Netherlands concerning the sustainability of the energy supply. Foreign energy companies will not want to spend any money on the sustainability of the Netherlands energy economy. Such conversation practices are not only necessary in order to combat global warming but also to reduce dependence on foreign countries for access to fossil fuels. In our view, division will only increase foreign dependence, a danger that, to our great disappointment, has not come up in the discussion.
In the interest of the Netherlands, we have made great efforts to act as a partner to this cabinet in responding to both the point regarding independent management and the one concerning conservation. We continue to appeal to cabinet and parliament to find a way out of the division rhetoric and to work toward a healthy and affordable energy supply in the Netherlands for the present, but also for 10 years hence. We therefore eagerly await the outcome of the debate in the Dutch Parliament.
Published: 08 June 2007