ACM Publishes TenneT Tariff Proposal for 2023

Source: 10/6/2022, Location: Europe

Mainly as a result of high prices in the electricity market, TenneT's transmission tariffs will rise sharply in 2023. This is shown in TenneT's tariff proposal for 2023 published today by the Authority for Consumers & Markets (ACM).

TenneT's Annual Market Update 2021 describes, among other things, that electricity prices in Europe increased significantly from the second half of 2021. In the first quarter of 2022, these prices are about four times higher than in the first quarter of 2021. These price increases also affect the level of TenneT's transmission tariffs.

Through its tariffs, TenneT has to cover, among other things, the so-called purchasing costs for energy and capacity and the investments in the national high-voltage grid. Purchasing costs for energy and power include costs for: redispatch, the purchase of grid losses, reactive power and the contracting of balancing capacity (FCR, aFRR, mFRRda). Higher electricity prices also lead to higher prices for the various components of these purchasing costs. In 2021, the biggest cost increase occurred for redispatch. Here, besides the effect of rising prices, the fact that the volume of redispatch more than doubled in 2021 is also a factor, partly due to the work required to upgrade the extra-high-voltage grid.

Increase of purchasing costs for energy and capacity
Over the period 2018 to 2020, the total purchasing costs for energy and capacity averaged approximately EUR 280 million per year. In 2021 these costs were approximately EUR 850 million. The purchasing costs for energy and capacity are initially incorporated in the transmission tariffs as an estimate based on the historical average. After two years, the tariffs will be post-calculated on the basis of the actual costs incurred. The increased costs in 2021 will therefore be incorporated in TenneT's transmission tariffs in 2023.

TenneT transmission tariffs 2023
TenneT's tariffs, as a result of the above-mentioned cost increases, will start rising sharply from 2023. Additionally, high inflation also plays a role in this. In TenneT’s tariff proposal it can be seen that the tariffs for connected parties on the extra-high-voltage grid (EHV) will increase by 84% and for connected parties on the high-voltage grid (HV) by 51%. The ACM will publish the tariff decision for TenneT at the end of November.

At this moment, TenneT cannot provide an update to the earlier forecasted tariff increase in 2024. TenneT aims to provide its customers with an update at the end of Q1/2023.

Naturally, TenneT tries to reduce its costs wherever possible and thus reduce tariffs increases for its customers. However, TenneT's purchasing costs for energy and capacity depend mainly on developments in the electricity market.

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