ACM’s fall check: financial position of most energy suppliers has improved

Summary:

• ACM asked all energy suppliers to submit financial data for its annual fall check
• It turns out that energy suppliers are, on average, in a better position than they were a few years ago
• ACM also sees that several suppliers must improve their energy-buying strategies

The financial position of energy suppliers is, on average, in better shape than several years ago. Also, the vast majority of suppliers complies with the rules regarding sending annual bills and final bills to customers on time. These are some of the conclusions that the Netherlands Authority for Consumers and Markets (ACM) has drawn from financial data that the suppliers have submitted. ACM also sees that several suppliers must improve their energy-buying strategies, for example because suppliers have signed contracts with households and small businesses (‘small-scale users’) at fixed prices, but do not purchase enough energy in advance to meet these obligations. That makes suppliers vulnerable to price fluctuations on the energy markets.

Businesses that supply natural gas and/or electricity to households and small businesses must have licenses to do so from ACM. At the moment, 52 suppliers have licenses for supplying electricity, and 50 suppliers have licenses for supplying natural gas.

Manon Leijten, Member of the Board of ACM, adds: “We are seeing that energy suppliers have improved their financial position since ACM tightened the rules for energy suppliers in October 2022. However, we are also seeing that several businesses do not comply with financial, administrative and/or energy-buying requirements. We have placed those businesses under heightened oversight, and they are required to submit improvement plans. ACM is on the ball to protect consumers as much as possible.”

Average financial health has improved, buying strategies require extra attention

The data has revealed that suppliers are, on average, in a better position than they have been over the past few years. The equity positions (‘solvency’) of suppliers with high market shares have, on average, improved over the past few years. This is less the case for suppliers with smaller market shares. Individual suppliers may develop vulnerabilities if market circumstances seriously deteriorate. That is why ACM also checks whether suppliers are able to pass a ‘stress test’, and whether they have credible contingency plans in place.

In addition, ACM checks whether suppliers have purchased sufficient natural gas and electricity on time in order to be able to supply their customers energy at a fixed price during a fixed period (buying strategy). ACM has established that the buying strategies of several suppliers are not yet in order. ACM sees to it that these suppliers improve their buying strategies in the near future. ACM will, if necessary, use formal enforcement instruments in order to ensure they will do so.

Heightened oversight

ACM recently revoked the licenses of two suppliers, and five suppliers have voluntarily returned their licenses. Several suppliers are still under heightened oversight due to, among other reasons, concerns about the quality of their administrative systems, risk management measures, their financial position, and buying strategies.

Stricter admission policy

In the past few years, the number of suppliers with licenses has slightly dropped. At the same time, ACM sees that the number of market participants that are interested in a license increased in 2024. In 2024, five businesses held exploratory discussions with ACM about possible license applications. In these discussions, ACM paid extra attention to the legal requirements that come with a license after one has been granted. ACM has noticed that market participants sometimes underestimate what requirements suppliers need to deal with in practice. This year, ACM issued licenses to two businesses that met the legal requirements of reliability and the quality requirements. With regard to three businesses, ACM rejected their license applications or halted the application process because they did not meet the requirements.

See also

18-12-2024 ACM publishes the current state of play of its oversight over energy suppliers in the fall of 2024 (in Dutch