Wallonia’s willingness to push green energy is backfiring, as both energy producers and industrial consumers are taking the region to court.
The ongoing saga of green energy prices in Wallonia took a turn for the worse these past few weeks. Through ineffective financing methods, the government has forced electricity producers to up their prices, creating a wave of price hikes as companies along the value chain all try to mitigate the extra costs. Both energy producers and consumers are unhappy with the situation and are challenging the region in court.
The first to stand against the regional government were the electricity producers. The Federation of Electrical and Gas Companies (Febeg) and the Federation of Renewable Energies (Edora) contested a 2013 government budget decree by which they were partly responsible for the financing of Cwape, the Walloon energy regulator. Under this decree, entities with productions over 10kW must pay the Cwape a €0.45 fee per MWh, an amount which can represent as much as €130,000 a year for large producers. They had also contested this decree in the 2012 budget, and the claim is still being heard.
According to Febeg, this fee, combined with additional regional taxes, strict regulations and injection costs, artificially increases the price of green energy and green certificates.
These inflated energy prices have not gone unnoticed by energy consumers, but their immediate concerns lie elsewhere. Elia, the government-run agency that manages the electricity distribution network, is now charging injection costs, the aim of which are to generate €75 million a year to help finance Elia’s budget. Big energy consumers, such as ArcelorMittal, Solvay, BASF and Infrabel, have banded together and are taking the matter to court.
While both producers and consumers are taking legal action against the region, the price hikes have started making their way down the value chain. For instance, Infrabel, which maintains the rail network, has informed the railway operators that, due to the injection costs and more expensive green certificates, it would raise their energy bill. The SNCB alone will see its bill go up by €4 million and has already announced that ticket prices would in turn go up as early as 2014.
The Walloon Government’s latest efforts to promote green energy have turned out to be counterproductive. While it has promised households a reduction of their electricity bills, the fees it had imposed on producers and businesses are finding their way back to these same individuals.
By mandating that companies finance the green energy system to such an extent, the government has created a vicious circle in which companies turn these extra costs into higher prices, hence artificially increasing green energy prices for everyone.
In a country with already high energy costs, these counterproductive taxes have made the region of Wallonia less competitive for energy-intensive companies. The government needs to review its green energy policy and turn to alternative financing solutions that will not be detrimental to energy prices. For more information on AmCham Belgium’s energy recommendations, please read our 2013 Priorities for a Prosperous Belgium.