UK: The Sixth Reform Of The Belgian State: What Will Change For The Energy Sector?

Last Updated: 22 January 2014
Article by Louis-Bernard Buchman, David Haverbeke and Wouter Vandorpe

The sixth reform of the Belgian State has been recently voted in the federal parliament. This reform includes the modification of the Special Act and, the transfer of many federal competences to the federated entities. Numerous sectors will be affected by this reform, amongst which the energy sector.

A. Context: the sixth reform

The sixth reform of the Belgian State, as negotiated at the governmental coalition since October 2011, consists of two main components. First, the reform of the State aims at fundamentally modifying the Special Finances Act, in substantially increasing the fiscal autonomy of the Regions. Second, it provides for a substantial transfer of federal competences to the federated entities (eq. to 17 billions EUR). Almost all sectors of the Belgian economical and social landscape are affected.

This newsletter focuses on this component of the reform, and specifically on the bulk of the reform for the energy sector, namely the energy tariffs.

The legislative process from the institutional agreement to legislation is being finalised. Precisely, on the transfer of competences aspect of the reform, the Parliament agreed on 19 December 2013 on a Project of Special Act. The last step of the legislative procedure is for the King to sign the Project of Special Act.

B. Energy: transfer of tariff competencies to the Regions

For the Energy Sector, amongst the Belgian Constitution and the Special Acts (requiring a 2/3 parliamentary majority to be modified), the Special Act of 8 August 1980 is relevant and is being modified by Article 19 of the aforementioned Project of Special Act, providing that the Regions will be transferred part of the tariff competence that currently is a fully federal competence.

1. The federal competence on energy tariffs before the reform

Before the reform, under article 6, §1, VII, of the Special Act of 8 August 1980, the federal State is the only State organ competent as to tariffs.

The Regions are competent for:

(i) distribution and local transportation of electricity via networks which nominal voltage was inferior or equal to 70 000 volts;

(ii) public distribution of gas.

Until today, any decision on "costs" (operational costs, projects, public service obligations) is regional, whereas any decision on "benefits" (tariffs) is of federal competence.

2. The transfer of part of the tariff competence to the Regions after the reform

Change of art. 6 Special Act: Article 19 of the aforementioned Project of Special Act provides for modifications to the text of article 6, §1, VII, of the Special Act on Institutional Reform of 8 August 1980.

General rule: The general rule is as follows. The federal State remains competent to some extent as regards tariffs, except for what is expressly transferred to the Regions by the Special Act. Further, the federal State is competent with regard to regional pricing policy (which deals with the supply price component, not with the network tariff component of energy prices). The federal State is still competent as regards tariffs of networks having transportation purpose operated by the transportation grid operator (being Elia for electricity and Fluxys for gas).

Competence of the Regions: Regions will now be competent for:

(i) distribution and local transportation of electricity via networks which nominal voltage is inferior or equal to 70 000 volts, including tariffs of electricity distribution networks;

(ii) public distribution of gas, including tariffs of gas public distribution networks.

Exception: However, the Regions will not be transferred the whole tariff competence on distribution networks. The federal State will remain competent for:

(i) tariffs of networks having transportation purpose and that are operated by the same network manager than the transportation network, with respect to low-voltage electricity distribution networks;

(ii) tariffs of networks having transportation purpose and that are operated by the same network manager than the transportation network, with respect to public distribution of gas.

Regulators?: Regional regulators (CWaPE in Wallonia, VREG in Flanders, BRUGEL in Brussels) will consequently be competent as regards the control of tariffs regarding public distribution of gas and electricity (low-voltage or low-pressure networks). It is expected that they will begin to exercise their new competence as from 1st July 2014.

What about "residual" tariffs?: It can be deduced from what is explained above that the federal State will have "residual" competence for energy tariffs, while the Regions will exercise an (expressly) "attributed" competence for distribution tariffs. In other words, when confronted to a type of tariff not expressly conferred upon to the Regions in this Special Act, the federal State should be considered to remain competent.

Scheme: The division of competences on tariffs between the federal and regional level can schematically summarised as follows:

3. Assessment

The reasons for the transfer of part of the tariff competence were commendable: the Regions were already competent as regards electricity and gas distribution for operation costs, investment decisions, distribution regulation, and so on, while the federal State was the one determining distribution tariffs. It seemed thus logical to transfer the distribution tariffs competence to the Regions in order to link "cost" decisions with "profit" (tariffs) decisions of the grid operators.

The regional regulators will now have to be well prepared by the (expected) set-off date of 1 July 2014 for managing their new tariffs competencies. Prior to this, regional legislators will need to implement by the expected set-off date the legislation necessary for imposing and executing the tariffs.

One can wonder with respect to the electricity tariff competencies why only distribution tariffs were transferred to the Regions, since Regions are competent both for distribution and local transportation of electricity on low-voltage networks. It could have been more coherent to transfer both the distribution tariff and the local transportation tariff competencies to the Regions.

Besides, the federal State remains competent to define the regional pricing policy. With this measure, the extent to which Regions can determine the tariffs of the distribution networks risks to be disproportionally undermined. As the Constitutional Court decided in its judgment of 15 October 1996, tariff schemes cannot be dissociated from pricing policy. This is however still the case in practice on the markets, also after this State reform. Much discussion can therefore be expected around this.

Other modifications

It should also to be noted that with the sixth reform the federal authority, which was previously competent for the national plan of infrastructure for the electricity sector, will be competent for the studies on energy supplies prospects.

The binding nature of the national plan of infrastructure for the electricity sector was indeed judged contrary to the European rules regarding free movements of goods, and was replaced by a study on energy supplies prospects (as determined in article 3 of the 29 April 1999 Belgian Electricity Act). It was therefore necessary for the Project of Special Act to reflect this modification.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Louis-Bernard Buchman
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions