The Influence of Public Service Obligations on Distribution Network Tariffs

K. Verhaegen, L. Meeus, and R. Belmans (Belgium)


Energy Pricing, Regulation, Public Service Obligations, Distribution Network Tariffs


This paper investigates the influence of public service obligations on the distribution network tariffs, taking Belgium and in particular the Flemish region as a case study. Electricity tariffs in Belgium are among the highest in Europe and network charges represent a substantial part of them. Within the distribution network tariffs, a distinction can be made between exploitation costs and public service obligations. It is demonstrated that the costs of the latter have increased significantly in recent years, occupying an increasing part of the distribution system operators’ budgets. This paper illustrates that implementing public service obligations the way it has been done in Flanders leads to significant differences in distribution network tariffs, only due to differences in DSO’s estimations of the required costs. Comparing the Flemish situation to the rest of Europe, it becomes clear that not only there are a lot of public service obligations in Belgium, but also that they are not always imposed on the most appropriate market player.

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