CEER Statement on the European Commission’s Legislative Proposal for the Design of Network Charges
Network Tariff Design is the Regulators' Job
The proposal for a regulation “to future proof electricity bills in the European Union” made on July 17 aims at amending the existing article 18 of the Regulation on the internal market for electricity governing the definition of network charges. It reaffirms existing principles but risks undermining the independence of national regulators in implementing them.
National Regulatory Authorities (NRAs) have a long-standing and high degree of technical experience in setting network charges, also known as network or grid tariffs, ensuring that network tariff design contributes to a cost-efficient and fair energy transition. Electrification requires increasing investments in the grid, to make it future proof. NRAs have the expertise to ensure that these investments are carried out in a cost-effective manner.
The Council of European Energy Regulators (CEER) stresses the importance of maintaining, in the final text resulting from this legislative proposal, the central and independent role of NRAs in their core competence to fix or approve grid tariffs and their methodologies. At a time when the cost of energy is a top public concern, the independence of NRAs is more important than ever to help deliver more affordable energy to consumers and competitive energy to industry.
Independence of NRAs is fundamental to ensuring that regulatory frameworks support efficient grid investment and operation, ultimately leading to fair prices for households and businesses. The proposal should explicitly safeguard the discretion of NRAs, uphold the principle of cost-reflective tariffs, and promote consistency, while preserving sufficient regulatory flexibility for NRAs. As tariff methodologies and tariff setting are core competences of NRAs, these NRAs must be at the core of national processes related to tariffs.
This includes incorporating signals that incentivise efficient grid use while fairly allocating costs among all system users, for example through time-differentiated or locational charges as appropriate. Differences in the network tariff design across Member States can be explained on the grounds of network topology, system needs, number of network operators and the interplay with non-network components billed by energy suppliers, among other reasons. A stable, independent and non-discriminatory regulatory regime is paramount to attracting, as well as providing credible assurances, for the much-needed infrastructure, storage and demand response investments to achieve the energy transition. Reliability, predictability and impartiality of the regulatory framework are imperative for investors.
To ensure affordable and competitive electricity prices and efficient use of the grid, the proposal should strengthen the independence and discretion of NRAs. Otherwise, it may not be possible to achieve the intended “future proof and affordable” energy bills we all strive for.
CEER believes that it is sufficient to set out core tariff design principles to achieve cost-reflective, transparent and efficient tariffs welcoming the European Commission’s proposals in this regard.
Press Contact:
Ms Justyna Wojtowicz
Tel: +32 (0)472 74 02 82
E-mail: justyna.wojtowicz@ceer.eu
