The Federal Energy Regulator (CREG) will reject the requested tariff increase by Belgian high-voltage operator Elia, which it argued was necessary for infrastructure investments.
In Elia's report of its half-year results, the energy operator reiterated the "growing demand for electricity" it was facing and the urgent need to invest in infrastructure to meet it. It argued that it needed to increase its tariffs by around 80%, which it estimated would add an additional cost of €2 to €3 per month on an average electricity bill.
Discussions with CREG have been ongoing but had been recently stalled over concerns about potential impacts on Belgian citizens' bills. In these discussions, Elia argued that there would be long-term benefits for consumers, such as a drop in the wholesale price of electricity.
However, CREG has cut discussions short and said it will reject the increase in tariffs in September, La Libre Belgique leaked the news on Wednesday. CREG, in its reasoning, argued that these requests "deviate from the tariff methodology approved by CREG in June 2022" which also followed lengthy negotiations with Elia.
CREG would allow a doubling of Elia's tariffs by 2027. In that case, the cost paid by a household would rise from €40 to €80 a year in 2027.
It will also oppose the request to receive a return on equity of 7.6%, compared with the 5.8% (after tax) as specified in the current 2024-2027 tariff methodology, arguing that this increase in the remuneration of Elia's shareholders would result in an additional cost of more than €100 million per year, which would be passed on in electricity bills.
Unprecedented situation
The federal regulator fears that consumers’ bills could explode, as the tariff increase requested by Elia does not take into account the increase in the return on its equity.
However, Elia stressed that an increase in the remuneration of its shareholders is justified by the fact that the "financial markets have changed profoundly" since June 2022.
Tariffs are due to be set in November, and the company is expected to present a new tariff proposal by then. Elia was not contacted by CREG itself regarding this decision ahead of publication by La Libre.
One source at Elia told The Brussels Times that it is unprecedented that such a decision, made during confidential discussions, is being leaked through the press before the company itself is informed about it, and warned of the implications this could have for the publicly traded company.
