The Government of Flanders will be taking their case against the region's energy regulator, VREG, to the Court of Appeal over its capacity tariff reform which could reportedly cause an even greater increase in skyrocketing energy bills.
VREG announced it would be introducing the capacity tariff reform on 1 January 2023, which could see some 40% of households face larger annual bills, without making the suggestions made by the government in light of the energy crisis.
Although the reform's introduction was twice postponed by six months, Flemish Energy Minister Zuhal Demir said that the timing of the introduction is wrong. Ministers had previously argued that an energy crisis is "not the right moment for a reform that increases the bill for too many people," and called on VREG to either rethink the reform or introduce it at a much later stage.
"I already said that I do not agree with the introduction of the capacity tariff in its current form. The energy transition is already challenging enough. The fact that the VREG ignores a virtually unanimous request from Parliament is therefore too ridiculous for words," Demir said.
"I promised the Parliament and the people that I would exhaust all means, including legal means, to prevent the introduction of the capacity tariff in its current form and at this time. That is why we are going to the Court of Appeal," she added. This will mark the first time ever that the regulator has to appear in court.
What is the capacity tariff?
The capacity tariff introduction was originally planned for 1 January 2022, but at the request of Demir and several other energy players, the VREG decided to postpone the introduction for the first time to 1 July 2022, and later to 1 July 2023.
The introduction of the new system would change the way people pay the Flemish distribution network operator, Fluvius. From the start of next year, the contribution will be calculated according to the average of the consumers' peak consumption.
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This will result in slightly more than half of the network costs being calculated on the basis of consumption peaks, while only part of people's actual energy consumption will be included. The peaks will be measured by the digital electricity meter, while a fixed contribution will be charged for people with an analogue meter.
Household consumers are billed annually, meaning the average of their monthly peaks over the past 12 months will be taken. The capacity tariff has no effect on the energy tariff, only on the distribution network costs part of energy bills.
Salt in wound for consumers
According to VREG, the distribution network rates will fall or rise by a maximum of 10% for just over half of Flemish households, and households will even see their bills decrease if they manage to spread their electricity consumption. However, Demir cited research showing that 40% of households will see their annual bills increase.
"Making such a change to the energy bill during an energy crisis in which an increasing number of households are already in a very difficult situation causes me concern," Demir said.
"At the moment, there is no certainty that this energy crisis will be over by this winter - quite the contrary. I would therefore like to propose that the capacity tariff be further postponed until the situation has stabilised sufficiently," she said in a letter to VREG in May.
Before the Court of Appeal, the Flemish Government will argue for a reworking of the current tariff proposal by VREG and a new start date, later in time. "The introduction of a capacity tariff could be postponed until the majority of the Flemish people have a digital meter," Demir said, which she predicted would be by the end of 2024.
