Societal and legal context surrounding connection issues

Until 21 February 2025, the 1998 Electricity Act contained the legal provision that the grid operator had to realise a connection to the electricity grid within a reasonable time, which reasonable time had in any case expired after 18 weeks had lapsed since the application. Due to the increasing workload of grid operators in recent years, this deadline, added to the 1998 Electricity Act by amendment in 2004, has no longer been feasible in recent years. Apart from the sometimes seemingly limited physical works required to realise a connection, a lot of grid design and work preparation happens behind the scenes. With their scarce technicians, grid operators are no longer able to complete such assignments within the speed as the many connection requests and grid construction and reinforcement works come along (which compete for the same technicians’ precious time). As a result, queues build up, so that even relatively simple connection orders can end up having to wait a long time.

To enhance political independence of energy sector supervision, the Third Electricity Directive (Directive 2009/72/EC) stipulated that national regulatory authorities must be able to operate independently from politics, and that they have, among other things, the exclusive power to set conditions for grid access (Article 37(6)(a) Directive 2009/72/EC). The 18-week deadline concerned such a grid access condition, and thus became a breach of this exclusive competence of the ACM. This however flew under the radar when the third Electricity Directive was implemented in the Netherlands. Following two European Court of Justice rulings of 30 December 2020 and 2 September 2021 on this division of powers, the ACM became aware of this. The ACM subsequently declared the 18-week deadline unenforceable in its own press release and announced the introduction of ‘its own’ deadlines. In practice, however, civil courts proved to have a lot of difficulty in not applying the 18-week deadline, as it was included in a law enacted by the highest Dutch legislator. This made the ACM's case-law and civil jurisprudence diffuse on this point, while the connection deadlines for large connections did not come into force until years later, on 1 January 2025.

The facts of the case

To expand its business operations, ZT Netherlands moved to a larger site in the same business park in Almelo in the spring of 2020. However, the electricity grid connection at this premises was insufficient for its operations, so on 20 May 2020 it applied with Enexis for a large connection of 1,750 kVA. As ZT Netherlands had already moved, it indicated in the application that the connection should be realised as soon as possible. Due to the already increasing workload at the time and the increasing queues, Enexis indicated that the average realisation time was 45 weeks. ZT Netherlands signed Enexis' offer on 22 June 2020, but under protest regarding the realisation period. While ZT Netherlands turned up the pressure on Enexis with legal notices, it simultaneously already had eight diesel generators installed with a total capacity of 3,250 kVA to continue its business operations. Enexis finally managed to realise the connection on 17 December 2020, 25 weeks after the agreement was signed. ZT Netherlands subsequently held Enexis liable for the integral costs of renting and firing the diesel generators, originally estimated at more than one million euros.

District court ruling

In the interlocutory judgment of 13 September 2023, the district court ruled that the 18-week deadline was binding, despite its conflict with European law, now that it was included in a law enacted by the highest legislator. Thus, the unlawfulness of the realised 25-week connection period was a given for the district court. Enexis additionally invoked the exclusion clause in its general terms and conditions, which excluded liability for consequential damage and damage caused by delay.

ZT Netherlands argued that Enexis' reliance on its exoneration clause was unacceptable by the standards of reasonableness and fairness (as possible under Dutch civil law), because Enexis would have deliberately chosen not to connect Enexis immediately, but only after repeated reminders by ZT Netherlands. Although Enexis countered that it had to deal with a backlog of similar orders and could not put ZT Netherlands ahead of this queue, the court ruled that these circumstances could not be held against ZT Netherlands. Enexis was thus held liable for ZT Netherlands' damages, which was set at EUR 173 thousand after deducting all cost savings.

Implications of district court ruling

The implications of the court's judgment were significant. Enexis was held liable for all consequential damages resulting from exceeding the 18-week deadline, even though there were no aggravating circumstances. On the contrary, ZT Netherlands was connected in 25 weeks instead of the average connection time of 45 weeks at the time. If Enexis was held liable for exceeding the 18-week deadline in this particular case, not only Enexis, but all grid operators for each of thousands of their connection orders could be liable for their connection customers' integral company damages. This judgment therefore prompted the announcement of some collective actions.

Court of Appeal ruling

Because of the far-reaching consequences, Enexis appealed the district court's judgment. In that appeal, Enexis argued, among other things, that Article 60(8) of the Electricity Directive 2019/944 stipulates that grid operators like Enexis must be able to appeal against the terms and conditions on access to the grid, which, pursuant to Article 59(7) of the same directive, must be determined by the national regulatory authority (in the Netherlands, the ACM). Because the 18-week period was included in the 1998 Electricity Act by the Dutch legislator (which was non-appealable), rather than by the ACM in a code decision, Enexis was not able to challenge this period and therefore derived of its right to an effective legal remedy, as prescribed under the Charter.

The Court of Appeal followed this argument, leaving Section 23(4) of the Electricity Act 1998 inapplicable because of conflict with Section 47 of the Charter. What remained was the testing of the specific connection period of 25 weeks against the general ‘reasonable’ period. Here, too, the court went along with Enexis' argument that this period was reasonable under all given circumstances. Important considerations in this respect were (i) that the 18-week term was established at a time that is incomparable to the current situation, (ii) that according to an overview from a draft decision of the ACM, the average realised terms for large connections by network operators in 2020 was already 35 weeks, and (iii) that the current minimum connection term for technically low-complexity connections in the Grid Code is also already 26 weeks (without considering the dynamic queuing component of these periods).

Perhaps even more interesting, are the Court of Appeal's considerations regarding ZT Netherlands‘ defence that the “first come, first served” policy applied by grid operators is not mandatorily prescribed for the realisation of connections, and Enexis should have prioritised ZT Netherlands’ connection because of the greater interests ZT Netherlands would have. The Court of Appeal ruled that the ‘first come, first served’ policy did not appear unreasonable to the court in general, in which the court sees confirmation in a 2022 parliamentary letter by Minister Jetten, in which the minister also mentioned ‘first come, first served’ as the principle. As ZTN did not, or at least did not sufficiently, argue why its connection was more urgent, ZTN did not have priority over the queue.

In this consideration of law, the Court of Appeal seems to reverse the burden of proof by formulating a generally applicable rule: first come first served is reasonable, and if this should be deviated from in the interest of a specific applicant, this applicant should provide evidence for this. Incidentally, it is unclear what circumstances in general would justify priority, as almost everyone has either social or financial interests in a quick connection to transport capacity. What is clear, however, is that in doing so, the court seems to be breaking with a 2020 opinion of Advocate General Drijber, in which he considered that first come, first served is not prescribed and could just as well be replaced with a system based on urgency of application.

Wider relevance of the judgment

Although the 18-week term has already been removed from the Electricity Act 1998 as of 21 February 2025, this judgment remains relevant for several reasons. First, to date, no realisation periods apply to small connections, which means that the starting point for such connections remains undisputed the general reasonable period (instead of the 18-week period). Moreover, for all large connections realised until 1 January 2025, there was still the question of whether network operators were liable for (in most cases) exceeding the 18-week deadline. In any case, this judgment seems to close the door for class action lawsuits, as it will have to be assessed individually for each realised connection whether the general reasonable connection period was in fact exceeded.

Finally, the court's rulings on the first come, first served policy of grid operators may potentially be more widely relevant. For instance, this policy may still prove relevant in the future on all kinds of works where the execution capacity of grid operators is limited, such as grid construction work or congestion management (feasibility) studies.

The Energy & Infrastructure team of Loyens & Loeff is proud to have assisted Enexis in this appeal. The ruling of the Court of Appeal in 's-Hertogenbosch can be found on the website of De Rechtspraak.