Since the last federal general elections, held on 13 June 2010, the Belgian federal level still has no ruling coalition. Talks have been going on for 239 days without any perspective for a government to be form in the near future.
Professor in law and minister of state Johan Vande Lanotte lead the discussions for the biggest part. His proposal, which was ultimately not acceptable for the Flemish nationalists and the Flemish Christian-democrats and was substantially questioned by the French-speaking social-democrats and Christian-democrats, was published last week in the French-speaking newspapers Le Soir and La Libre Belgique.
In the field of energy, the proposal aimed at the regionalisation of the setting and supervision of the regulated tariffs for the use of the natural gas and electricity distribution systems. Although the regions are competent for the distribution of electricity, up to now it was the federal regulator that approved the distribution tariffs.
At the request of the Flemish parties, the proposal wanted to implicate the Flemish region in the offshore energy activities. [As from the low water mark, the territorial sea and the exclusive economic zone are federal competence.]
The proposal remained a proposal, as in 2007.
Monday, 7 February 2011
Proposals for a constitutional reform – failed but interesting
Wednesday, 14 October 2009
Postponement of the nuclear phase out
On 13 October 2009 the Belgian federal government decided to postpone the nuclear phase out of the three eldest nuclear plants with 10 years. This would mean that in the soon to be adopted new regulatory framework all Belgian nuclear plants will close between 2022 and 2025.
As a favour in return, GDF Suez and Electrabel would have agreed to pay 170 M EUR per annum from 2010 until 2014. The other nuclear market participants (EDF Belgium, SPE and eventually E.ON) will have to pay the remaining 45 to 75 M EUR per annum (until 2014). GDF Suez will also invest in R&D on CCS and nuclear waste, in renewable energy and in energy efficiency.
At the same time, a 'Follow Up Committee' will be installed. This Committee will be composed out of representatives of the nuclear producers, the government and the social partners, and of representatives of the National Bank of Belgium. The main tasks of this Committee will be to yearly evaluate the production costs of nuclear energy and to evaluate the electricity market prices. It will also have to verify that the household prices of all suppliers will in no way be higher than the average of the prices in the neighbouring countries.
The decisions still must be transposed into formal legislation. Nevertheless, some ideas can raise concerns about the development of a liberalised energy market in Belgium and about the position of other market players (will they contemplate building new power plants? will they be able to raise their market share?). From a legal point of view, it remains to be seen whether this decision to postpone the nuclear phase out will stand the test of EU law and of Belgian constitutional law.
In any case, interesting regulatory and legal times lay ahead.
A free English translation of the relevant excerpt from the governmental declaration will be send to you at first request. Please e-mail me.
Wednesday, 13 May 2009
Levy On Unused Electricity Production Sites
In 2006, the Belgian federal legislator imposed a levy on unused sites for electricity generation. In 2008 the amount of this levy was approximately EUR 50M. The Constitutional Court declared that the imposition was in line with the Belgian Constitution.
The aim of the levy was to force the incumbent electricity producer, Electrabel, to sell some or all of this sites to competing energy undertakings.
In 2008, the federal legislator amended the amount of the levy. As from the entry into force, this amount would be increased with EUR 20M.
In response to a question of Katrien Partyka (CD&V), the minister of energy acknowledged that imposing the levy did not reached the goals of releasing or selling these sites to other energy undertakings. All sites are still property of Electrabel and remain unused.
Thursday, 9 October 2008
250M EUR levy on the electricity producers in Belgium
Last week, the federal Council of Ministers agreed upon an one time indirect levy on the nuclear electricity producers in Belgium (SPE and Electrabel). The federal state will charge Synatom, the company responsible for the provisions for the phase-out of nuclear installations, for 250M EUR. Within 15 days, the nuclear electricity producers are obliged to reimburse Synatom with 250 M EUR. If the companies do not reimburse Synatom, a penalty of 2% of their annual income could be imposed upon them. The act prohibits passing the charge on in higher prices for the final customers.
Powers of the energy regulator strengthened
Thursday, 20 March 2008
New federal coalition agreement
The new federal government resolutely chooses sustainable development as guideline for her policy and acting. Therefore, she will develop a federal policy concerning sustainable energy in cooperation with the Regions and Communities.
She will tackle the problem of global warming and supports the “EU 2020” target: the EU needs to cut 20% of its greenhouse gases by 2020 and 20% of the EU energy needs to come from renewable energy sources by 2020. Therefore, the federal government as well as the regional governments will develop a climate plan to decrease the greenhouse gas emissions. The federal government will also stimulate other industrialised countries to act accordingly. To ensure that the targets will be achieved, a group of national and international experts will examine the ideal energy mix on the medium and long term. The Government will support the extension of a grid for decentralized electricity production.
Investments in renewable energy such as offshore windenergy will be increased. The government will encourage investments in sparing energy and create jobs in that sector. The whole plan will be based on third-party financing from investments in sustainably building and energy-efficiency.
The government also ensures the access to biofuels and stimulates its use. In addition, the government makes it possible for new electricity producers to develop on the Belgian market and to create real competition conditions, which means reasonable prices for consumers. The government chooses for the independence of grid operators and for an autonomous management of the transmission grids. The strengthening of the competition, in the advantage of consumers and companies, will be coupled with a real social energy policy that allows private persons and more specifically persons with a modest income to pay their bill and to keep up their consumption
Private persons and companies will be encouraged to limit their energy expenses. The government will launch an extensive plan to facilitate energy efficiency (buildings, vehicles, public tender, transfer of services). She will develop a taxation policy that encourages a well-balanced environmental behaviour, whereby tax advantages will be granted to energy efficient users. For example: encouragements to install a soot filter in the car, incentives for energy saving building improvements, etc.
The government approves the product standards which allow decreasing the amount of waste at source and the energy consumption. She stimulates a more sustainable mobility, opposing the use of cars for commuting between home and work and instead stimulating public transport, carpooling, etc.
All these measures will contribute to a decrease in the greenhouse gas emissions and thus stimulate a sustainable development.
Tuesday, 8 January 2008
The new Belgian Energy Minister is no big fan of a liberalised market
Paul Magnette, the Belgian (federal) Minister of Climate and Energy appears very reluctant toward the liberalisation of the energy market.
In an interview with De Morgen (a Flemish quality newspaper) he declared on a question about the willingness of Electrabel to sign an “ecological pact”:
"I do not know whether this is necessary. For me, free competition is no sacred principle. Even although Europe is fighting so hard for it. I am un homme de gauche. In some sectors, competition was wholesome, like in the telecommunications sector, but in the energy sector it did not lead to any advantage for the small customer. I also do not know very well how to organise competition with a natural monopoly. We cannot build new pipelines next to existing ones, can’t we? Europe has made a distinction between producers, grid operators and suppliers, but this has not given any positive effect. The quality has not increased, the invoices only became more complicated.
“If we want competition to work, there is above all things a need for a strong governmental regulator. Especially in sectors with a quasi-monopoly. We also must impose social and environmental aims in these sectors. That is more important than the competition in itself.."
Wednesday, 26 December 2007
Energy in the governmental declaration of the "interim"-government Verhofstadt III
The CD&V-N-VA, PS, Open VLD, MR and cdH agreed upon the following passus on energy and climate in the governmental declaration:
"6. Climate and energy will also be on top of the interim government's agenda. Next to measures with regard to spending power and in view of affordable prices and a guaranteed supply, we shall take additional measures to increase the stake of the consumers in the energy market. Belgium ranges itself with the goals of the second Kyoto-allociation plan and with the new goals for renewable energy. It will negotiate thereto with the European Commission on an ambitious and realistic contribution of our country. In the same spirit, the federal government will support the regions, the industry and the European community in finding solutions for the problems related to the allocation of CO2-quota for the 2008-2012 period. Furthermore it will activate and enlarge instruments to reduce the emission of CO2 in the residential sector and to decrease the bills of the families."
Friday, 21 December 2007
New federal climate minister
Monday, 10 December 2007
Unbundling and the standpoint of Belgium
Contrary to some rumors in the press, it appears from a discussion in the Belgian Senate on 6 December 2007 that Belgium is still opting for an ownership unbundling of the system operators. Only if the Member States would soften the principle of ownership unbundling, Belgium would not oppose this idea, provided that an efficient market functioning is guaranteed.
Monday, 5 November 2007
Partial governmental agreement on energy and sustainable development
The would-be federal political majority has not yet finalised the coalition agreement for the formation of a new federal government. However, a partial agreement on Energy and Sustainable Development was reached at the end of October.
"The federal government endorses the climate change goals set by the European Union (20% less emission of greenhouse gases, 20% more energy efficiency, 20% more renewable energy production). A national climate change commission will elaborate a multi annual climate plan. The Belgian government will use its international influence to have all industrialised countries participating in a reduction of greenhouse gases with 30%.
The government makes sure that the dominant player will observe nothing less than the obligations entered into vis-à-vis the previous government.
The government will closely follow the evolution of the energy prices and will create the conditions to allow an adequate competition. To that end, several additional electricity producers must be present on the Belgian market each having the possibility to acquire a considerable market share. The government will contribute to that as follows:
– To incite the dominant player to swap assets with competitors abroad; and/or
– To put at the disposal or to sell to other players, under the supervision of the CREG and against reasonable market conditions, a considerable share of the capacity (in MW) of the depreciated power stations; and/or
– To offer to other players (trough actioning or exchange) a considerable production share (in MWh) of the dominant player, under the supervision of the CREG, against a price composed of the production costs including the maintenance and replacement investments and a fair profit margin; and/or
– To create the preconditions allowing and encouraging other players to develop additional production capacity in Belgium (inter alia sites and access to natural gas and electricity grids);
– To put in all efforts to realise as soon as possible interconnectivity at the borders in order to obtain true competitive natural gas and electricity markets on a European level.
Moreover, the government encourages companies wanting to construct alone or in consortium a production unit for electricity.
The competition on the wholesale market for electricity must improve considerably. The electricity exchange BELPEX must be offered more marketable volume increasing the available liquidity for the suppliers. By analogy with the electricity market, the wholesale market for natural gas must become competitive. This will be realised by creating a gas exchange (GASPEX), on the basis of what currently exists and with safeguards for sufficient transparency, that will dispose of sufficient marketable volumes.
The government will give the federal regulator CREG the necessary independence to act against and to supervise ex ante an actual competition on the production and supply market and to monitor the price evolutions closely. It will evaluate the functioning and the tasks of the CREG. The government will grant a clear and plain strategical mandate to develop a long term vision.
The federal government will give the CREG a mission to monitor the tariffs. Moreover, the CREG will be able to propose to the government every measure contributing to the improvement of the functioning of the regulated activities and the applicable tariffs.
The government resolutely opts for the independence of the system operators and for an independent operation of the transport systems by reducing gradually the share of producers/suppliers under 25% and with a substantial presence of the public sector. Energy companies can obtain shares but cannot, individually or collectively, have or use a blocking minority for example through a shareholders agreement or special share related (voting) rights, nor can they appoint independent directors.
The network system operators must have disposal of sufficient financial elbow room for carrying out replacements and new investments and to carry out the necessary maintenance to the grids, inter alia to allow Belgium to continue its development as junction of the European transit and transport grid. The system operators must fully independently allow equal access to the grids to all market players.
The government will invite the regions to tune the different systems of renewable energy certificates guaranteeing at the exchangeability, inter alia to promote the lowest price for the Belgian consumers. The government will improve the fiscal measures in favour of sustainable energy, inter alia by organising a system of take-along or of tax credits for investments that encourage energy efficiency and/or sustainable energy sources (...).
The government will take care that equal access conditions exist for competitors to import, store and transport natural gas. In order to guarantee the natural gas supply, the government will see over a tariff policy by the CREG (...) allowing the transport system operators to invest in natural gas storage capacity and in interconnections. The government continues the conversion of the Zeebrugge Hub enforcing its position as international spill for the natural gas supply. In general, the government take care that the policy of the CREG allows the system operators to guarantee an optimal quality of the networks without this leading to an excessive price increase of the distribution grid tariffs.
The government will discuss with the regions the consequences of a progressive replacement of L-gas by H-gas.
The government maintains the nuclear phase out of the existing nuclear facilities as set out in the Act of 31 January 2003. In order to comply with the goals of reducing greenhouse gases and to guarantee the affordability and security of supply, it will extend the operational term of some nuclear reactors for a limited time and in safe circumstances. In dialogue with all stakeholders, the government wants to obtain a national transversal multi annual alternative for fossil energy and nuclear energy, also translating the CO2 reduction goals. In the meantime, it will have carried out all necessary investments in the electricity power stations guaranteeing a safe exploitation and it will have modernised the existing very polluting power stations in order to reduce the pollution per MWh. The revenues of the taxes on the exceptional profits of the production of the depreciated nuclear and coal power plants will partially be used in a new fund “depreciated energy production” for the production and development of alternative energy sources and energy efficiency, the roll out of decentralised grids, the decrease of the federal contribution, the technique of carbon sequestration, the support of the MYHHRA-project, a social energy policy.
In the framework of the discussions about the prolongation of some nuclear installations, the government will have thought for the problem of the final price for the consumers."
Monday, 1 October 2007
Network aspects of the new proposals to liberalise the energy markets
On 19 September 2007, the European Commission published the long awaited “Third Legislative Package” for the electricity and natural gas markets. This package is in line with the conclusions of the Energy Sector Inquiry, with the Commission’s document “Energy for a New Future” and with the conclusions of the European Council's Spring Summit.
After ten years of liberalisation of the energy markets, the European Commission is of the opinion that the process of developing real competitive markets is far from complete. In practice, too many of the EU's citizens and businesses lack a real choice of supplier. Market fragmentation along national borders, a high degree of vertical integration and high market concentration are at the root of the lack of a truly internal market.
Key elements in the liberalisation of the energy markets is the separation between energy production and the supply of energy to end consumers, on the one hand, and the network activities, on the other hand. Network operators are not allowed to produce or sell energy. Vice versa, producers and suppliers of energy cannot perform network activities.
Before liberalisation, network operators, suppliers and producers were part of the same unbundled companies. In the first two stages of liberalisation, functional and legal unbundling had to allow access for new entrants to the market. However, it appears that the network operators that still are part of integrated companies can be less keen in investing in the conveyor belt in order to avoid congestion and to give access to new entrants. The market share of historical operators remains high.
Where the network operator is a legal entity within an integrated company, three types of problems arise: (i) the operator may treat its affiliated companies better than competing third parties. (ii) non-discriminatory access to information cannot be guaranteed as there is no effective means of preventing operators releasing market sensitive information to the generation or supply branch of the integrated company and (iii) investment incentives within an integrated company are distorted. Consequently, the Commission proposes an effective separation of supply and production activities from network operations.
For the Commission, the main option is ownership unbundling: the same person or persons cannot exercise control over a supply undertaking and, at the same time, hold any interest in or exercise any right over a network operator or system. An alternative option is the "Independent System Operator". This option enables vertically integrated companies to retain the ownership of their network assets, but requires that the network itself is managed by an undertaking or entity entirely separate from the vertically integrated company, performing all the functions of a network operator.
A temporary derogation to ownership unbundling will remain possible for new projects (eg the construction of another LNG-terminal in Zeebrugge).
Responding to the alleged threats to the security of supply, the Commission also proposes to insert a “Gazprom” clause in the new legislation. No supply or production company active anywhere in the EU can own or operate a network in any Member State of the EU. This requirement applies equally to EU and non-EU companies. This reciprocity obligation obliges companies from third countries to demonstrably and unequivocally comply with the same unbundling requirements as EU companies.
In the Belgian context, the new legislative proposals would oblige the Suez-group either to divest its interests in Fluxys, the network operator for natural gas, and in Elia, the network operator for electricity, or to leave the management of the networks to an independent operator.
It remains to be seen whether the proposals of the European Commission will be acceptable for the Member States. Already before the publication of the Third Package, France and Germany made it clear that ownership unbundling and even an “Independent System Operator” would be a step too far. Although Belgium is part of the supporters of the Commission's proposals, in the last version of the draft coalition agreement for the formation of a new federal government, the parties did choose for the independence of the network operators, but did not adopt a clear ownership unbundling. The draft stated that independence had to be achieved “through a predominant public ownership and a public operation of the systems and by reducing the share of the producers/suppliers below 25%. Energy sector companies can acquire shares, but cannot have or use a blocking minority, for example by means of a shareholders agreement or special voting rights, nor can they appoint independent directors.”
Wednesday, 8 August 2007
New draft governmental agreement
Today, the Belgian media publish the new draft on their respective websites. Below is a (free and quick and almost literal) translation of the part on the TSO's:
The Government resolutely chooses for the independence of the TSO’s through a predominant public ownership and a public operation of the systems and by reducing the share of the producers/suppliers below 25%. Energy sector companies can acquire shares, but cannot have or use a blocking minority, for example by means of a shareholders agreement or special voting rights, nor can they appoint independent directors.
The TSO’s must have sufficient financial means to carry out replacements and new investments and the necessary maintenance to the system, inter alia in order to allow Belgium to continue its development as junction of the European transmission system.
The government watches over the promotion of interconnections at the borders.The government will provide non-discriminatory access conditions to competitors for the import, storage and transport of natural gas. In order to safeguard our natural gas supply, the government will see to it that the policy of the CREG relating to the monitoring of the costs of the TSO’s allow the latter to invest in natural gas storage capacity and interconnection capacity. The government will continue the transformation of the Zeebrugge hub in order to strengthen the position as international pivotal point for the supply of natural gas. In general, the government will see to it that the policies of the CREG allow SO’s to guarantee an optimal quality of the systems.
Tuesday, 24 July 2007
Proposals for the new federal government
Yesterday Yves Leterme presented his memorandum for negotiations with a view of the formation of the next Belgian federal government.
In his memorandum, two pages are dedicated to the energy market.
At first sight, Leterme did a good job in hiding his understanding of the liberalised energy markets.
A short overview of his proposals:
- SPE must be "structurally strenthened";
- Next to SPE and Electrabel, only one third producer must enter the market;
- Both SPE and the third producer must be able to buy together a 30% stake of the nuclear capacity at a cost plus price;
- Producers and suppliers cannot hold more than 25% of the shares of the TSO;
- The import and transport of natural gas must be based on non-discriminatory conditions for all parties;
- The federal state will invest in storage capacity and interconnection capacity;
- Zeebrugge must remain an important hub;
- The nuclear phase-out is softened;
- The CREG must be strengthened, but also more monitored.
On my Dutch weblog I give a full overview of and some first comments on the memorandum.
Wednesday, 20 June 2007
Abundance of new regulation
- The Royal Decree of 8 June 2007 on the tariffs for the use of the gas transmission system, the LNG-terminal and the storage facilities;
- The Royal Decree of 8 June 2007 on the tariffs for the use of new gas transmission facilities, LNG-terminal facilities and storage facilities;
- The Royal Decree of 8 June 2007 setting the amounts for the financing of the CREG;
- The Ministerial Decree of 30 March 2007 setting the maximum princes for the supply of natural gas to protected customers;
- The Ministerial Decree of 5 June 2007 approving the by-laws of Apetra;
- The Decree of the Flemish Parliament of 25 May 2007 modifying the Electricity Decree and the Natural Gas Decree.
Since I'm still reading trough these new regulations, I will comment (if necessary) later on this blog.
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