Dutch court forces Enexis to connect charging station group Leap24 to power grid

Dutch sustainable mobility and charging station group Leap24 has announced that it has won an important court case against Enexis, a grid operator in the Netherlands, in which the court ruled that Enexis must connect Leap24 to the power grid.

The District Court in East Brabant ordered Enexis, on pain of penalty payments of €5,000 per day with a maximum of €250,000 per location, to start making power connections at three locations in the province of Groningen within six weeks.

For Leap24, the decision is a major victory. The group, which is building a network of charging stations in the Netherlands, the UK and Germany, gets the connections it needs to expand its operations. And if not it can collect the fines imposed by the court on Enexis.

The ruling is relevant because, amid widespread grid congestion in the Netherlands, many parties face long waiting times for connections – and, if connection is possible, then many face transmission constraints: although they may get (possibly after long waiting times) a connection, they might not get power and be able to deliver power back therefore creating transport constraints. On basis of earlier case law it has become clear that the connection obligation cannot be seen separately from the transmission capacity. So by offering a connection to the electricity network and in fact attaching the condition to the condition that the customer does not use any transmission capacity on that network, a system operator does not fulfil its legal obligation to connect.

Enexis procedure

Leap24 brought summary proceedings against Enexis because the operator had repeatedly postponed the original delivery dates for grid connections, thereby failing to meet reasonable deadlines.

Enexis is a grid operator within the meaning of article 10(9) of the Electricity Act 1998. Article 23 of the Electricity Act stipulates, in brief, that a connection must be realised by a grid operator within a reasonable period of time. Under the Electricity Act, this reasonable period will in any case expire after 18 weeks after the request for a connection is submitted to a grid operator.

The operator of the electric vehicle (EV) charging-station network demanded that Enexis connect the three sites to the electricity grid within certain deadlines. Leap24 claimed that Enexis used unreasonably long lead times, in violation of the Electricity Act. The judgement showed that Enexis had included expected lead times of 52 to 65 weeks (well beyond the 18-week deadline) in its issued offers.

Leap 24 then summoned Enexis to realise the connections within approximately the 16-18 week period from the date of the letter. Enexis responded that due to shortage of staff, it would not be able to comply with the summons and that for one location, the lead time had even reached 72 weeks.

Leap24 argued among others that transport capacity had been agreed and was available for these locations, so there is no congestion on the grid for these connections.

18-week deadline in breach of European law

Enexis defended itself by arguing that the 18-week time limit from the Electricity Act is not binding, as this statutory provision would be contrary to European law, more specifically article 59(7) of Directive 2019/944/EU. According to the directive, the deadline should have been set by the Netherlands' Authority for Consumer and Market (ACM) and not the Dutch legislator, Enexis said.

Referring to other judgments, the court acknowledged that the 18-week period is indeed contrary to the directive. And it also noted that the explanatory memorandum to the draft Energy Act (that will eventually replace the Electricity Act) also recognises that the ACM will have to determine what a reasonable term is.

However, it has not been argued by Enexis that the "reasonable time" requirement included in the Electricity Act also violates European law. So a period outside the 18 weeks (in theory an even shorter one) can still be deemed unreasonable.

If a directive has not been implemented correctly then there are two options. The first is to see if the law can be interpreted in compliance with the directive. If that fails, then it is considered whether the directive could possibly have direct effect. Here, the court ruled that there is no possibility for either option. Since this is a relationship between two private parties and not a relationship between the government and a private party. The judge, therefore, did not dismiss the 18-week period.

Enexis' defence based on the doctrine of the "incidental (exclusionary) effect" also fails. In short, this means that the conflict between a provision of national law and European law could in some cases be invoked in a horizontal relationship as a defence against a legal claim of another private party. According to the court, this was however not a situation to which this doctrine applies.

The court then continued that even if the 18-week period were non-binding, it would still be up to Enexis to at least realise the connections within a reasonable time.

ACM draft decision code changes connection terms

For interpretation of this open standard, the referred to the draft code decision amending terms for connections (Ontwerpbesluit codewijziging aansluittermijnen) published by the ACM on 14 July 2022.

Briefly, it states, among other things, that for connections larger than 3x 80A but smaller than 10mVA, the reasonable period is considered 40 weeks, counting from the day of receipt of the signed offer – and with an exception for force majeure situations. The ACM considered that the decision deviates from article 23(4) of the Electricity Act in the sense that the deadlines for connections below 10mVA do not apply in case of force majeure. Currently only for transport capacity requests does the Electricity Act have a ground for refusal in article 24(2) (if there is no capacity reasonably available).

Judgment on the reasonability of the term

The court considered therefore that in this case the 40-week period was reasonable. Enexis did not submit anything that should lead to a different view. Because Enexis had said that they would not deliver the connections earlier than 2025 the court also found that Leap24 had a reasonable interest in this court case.

From the court decision it appears that the offers for the connections were signed on 6, 13 and 26 April 2023. When adding the 40 weeks to this, the deadline for delivering connections would have been January 2024. In its decision of 6 February 2024, the court ruled that Enexis had no longer than 6 weeks to start work on the connections and not more than 4 weeks (10 weeks in total) to deliver the connections, therefore allowing a 50-week term after the offers were signed.

Force majeure

Enexis also raised a force majeure defence. The court did not go along with this. Enexis stated in general terms that it cannot independently solve the macro-economic problem of sufficient technical staff in the short or medium term, while its workload is constantly increasing. However, according to the court it is up to Enexis to ensure that it organises and sizes its business processes in such a way that it has sufficient capacity available to meet its connection obligations in a timely manner, even (or rather, especially) when requests increase and there are shortages. This is also in line with other case law. Nor has Enexis submitted any special facts or circumstances for the three locations that would justify a plea of force majeure.

In addition, the assertion of the force majeure defence in cases such as this will potentially lose force if it subsequently turns out that network operators, after court orders, "suddenly" do have resources available to realise connections to avoid penalties.

Discrimination ban

A spokesperson for Enexis said of the ruling "The court is forcing us to put Leap24 ahead of the game. As a result, other parties have to wait even longer before their turn. With its action, Leap24 is therefore disadvantaging the parties ahead of it in the queue." And that would mean Enexis would need to discriminate.

The defence of Enexis was that it should not be allowed to give Leap24 priority in view of the prohibition of discrimination contained in article 23(3) of the Electricity Act. The court ruled : "Just as the District Court of Gelderland considered on 20 December 2023, it should be borne in mind when assessing this appeal that this prohibition of discrimination was intended, in particular, to put an end to the situation in which (vertically integrated) companies could favour their own electricity production companies. By now legally enforcing a connection within a reasonable time, it cannot be said that Leap thereby abused any power to obtain a preferential position over others."

In other words, Enexis cannot get out of its obligation to connect parties by invoking the prohibition of discrimination.

Waiting lists

For transport capacity request, the "first come, first served" principle applies. This follows from the current Electricity Grid Code (Netcode Elektriciteit). For connection requests, this is not regulated by law. For connections there is only the prohibition to discriminate (which Enexis unsuccessfully tried to invoke).

Can parties "skip the queue" by litigating? And what will the other parties in the queue do in that case - wait patiently or start summary proceedings too? The court does not seem to find a claim by a party like Leap24 to be an abuse of rights.

Although not raised in the court case, the ACM has also published a draft code decision on priortitisation of transport connection requests (ontwerpbesluit over de prioriteringsruimte voor transportverzoeken) on 13 July 2023 amending the "first come, first serve principle" by allowing grid operators to deviate in case the applicant serves a significant public interest.

It also proposes linking connection applications (in addition to transport capacity requests) to the priority framework. Last year, 78 parties responded to this draft and there seems to be broad support for making exceptions to the waiting list. There are obviously different opinions on what then the exception categories should be; however, a final code decision is expected by the end of March 2024.

In its explanatory note, the ACM also seems to attribute a function to the non-discrimination principle for connection requests, while apparently in case law this seems to be a "dead letter" (insofar as it does not concern parties affiliated to the grid operator). The ACM argues that the statutory non-discrimination principle could perhaps be interpreted on the basis of the non-discrimination principle as included in the draft decision, thereby better aligning the connection request and the transport capacity requests. 

Osborne Clarke comment

Grid congestion is causing delays for parties who want to connect to the grid or increase transport capacity on the connection they already have. Grid operators are struggling to find solutions to the problem, but there is no quick fix and sometimes, unfortunately, they just have to sell 'no' to their customers.

This lawsuit may become a precedent and we expect more parties to resort to lawsuits against grid operators. We do think however that this development will only be advantageous for the 'first movers' and that eventually the 'force majeur' defence will put a stop to this.

There is a chance that Enexis will appeal this judgment. The fact that an appeal does not have to be without merit is shown by for instance this judgment. There, the summary proceedings judgment was eventually set aside and the solar farm's claim was rejected because the court of appeal ruled that it was sufficiently plausible that there was physical congestion at the time of the application and that the interests of the other connected parties with regard to safety and reliability of the grid outweighed the interests of the solar farm. But there too, proceedings on the merits (de bodemprocedure) may ultimately still lead to a different outcome.

We think it is good that the ACM has produced a framework to determine whether certain parties can be given priority, as this prevents arbitrariness and gives a certain degree of legitimacy to granting priority to parties.

In addition, it is a good development that the ACM creates more clarity regarding the deadlines that network operators must meet when realising connections. Whether grid operators can actually meet those new deadlines remains to be seen. It is unfortunate, however, that given the challenges in the market, it takes a very long time before the draft decisions are finalised by the ACM, even after completion of the consultation. We do think it is good that judges take these draft decisions into account in their assessment of disputes.

The problem can only ultimately be solved by expanding the power grid - which takes time - and in the meantime finding creative ways to cooperate and reduce the peak capacity required for the grid.