April 2010


European Energy Regulators’ News

Issue: April 2010

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- Energy regulators keep a watchful eye on retail markets

- See calendar of next workshops

New Public Consultations
-  See rolling 6 month calendar of public consultations
-  New consultation on Draft Guidelines of Good Practice on Indicators for Retail Market Monitoring

- Status Review on Capacity Allocation and Congestion Management for Gas Storage
- Press Release on Gas Transparency

Region in the Spotlight
-    Relieving bottlenecks on borders within the Central West electricity region

Member States are set to vote by today (28 April), through comitology procedure, on amendments to the Annex of the Gas Regulation on improved gas transparency requirements to be imposed on gas Transmission System Operators (TSOs).  As far back as 2007 in its advice to the European Commission on what should be in the 3rd Package, ERGEG called for gas transparency improvements and for them to be made legally binding. These improvements proposed now by the Commission (which include information on balancing, LNG and storage) should help efficient and competitive markets to develop (see ERGEG/CEER Press Release).

On 16th April, ERGEG hosted a workshop on the first pilot Framework Guidelines in electricity, namely on Electricity Grid Connection, to solicit feedback on its draft impact assessment on the framework guideline. The event was coordinated with an ENTSO-E workshop on its pilot network code on connection of wind generation on the same day.

ERGEG has published its (2009) Status Review on Capacity Allocation Mechanisms (CAM) and Congestion Management Procedures (CMP) for gas storage across European countries.  Building upon an earlier (2008) review it identifies the main problems of the storage markets in the EU. For example the regulators consider that First Come First Served –the most widely used CAM - causes problems in terms of discrimination.  The report will provide the basis for future ERGEG recommendations on CAM and CMP (which will be publicly consulted upon) that could help improve the functioning of the storage markets.

Europe’s regulators met with the Ibero-American counterparts for the second CEER-ARIAE regulatory roundtable on 8 April 2010 in Madrid (see International section below).   

The feature article (below) is on the new ERGEG public consultation on Draft Guidelines of Good Practice on Indicators for Retail Market Monitoring.

The region in the spotlight is the Central West electricity region which has published its report on electricity interconnection management and use in 2008 within the internal borders of the CWE region (which itself covers 5 countries).  ERGEG itself is consulting (deadline is 14 May) on its draft benchmarking report on medium and long-term electricity transmission capacity allocation.

The major disruption to flights across Europe caused by the Icelandic volcano impacted on the CEER 10-year birthday celebration which had to be cancelled.  The champagne is on ice for a future date.

Energy Regulators keep a watchful eye on retail markets

On 20th April 2010, ERGEG launched a public consultation on its draft Guidelines of Good Practice (GGP) on indicators for retail market monitoring.

Evolving retail markets
Retail electricity and gas markets were fully opened in EU Member States on 1st July 2007.  Across many Member States, retail markets continue to be in a development stage. Consumer confidence might not yet be at a level where consumer behaviour exerts a significant competitive constraint on suppliers, and markets may still be highly concentrated. National energy regulators therefore need effective methods for market monitoring to ensure that competition is developing.

Current monitoring practices
Every year since 2005, each national regulator in Europe publishes on our website a national report (in the Member State’s official language(s) and in English). In parallel many regulators conduct their own retail market monitoring (Annex 4 of the ERGEG paper on draft GGP on Indicators for Retail Market Monitoring provides hyperlinks to these monitoring activities by the individual regulators).

Well-functioning, competitive and integrated markets which provide efficient and secure supply of electricity and gas to customers are the ultimate objective of the European energy regulators. Thus, ERGEG assesses the national reports and identifies general developments and tendencies in the European energy market in its (annual) ERGEG Status Review on the Liberalisation and Implementation of the Regulatory Framework.  These national reports and the ERGEG assessment are the basic inputs used by the European Commission in its annual benchmarking report of progress towards competitive EU energy markets.

New duties on regulators and ACER to monitor retail markets
Indicators for retail market monitoring vary across countries. Furthermore, the duty of national regulators and the Agency for the Cooperation of Energy Regulators (ACER) to monitor the level and effectiveness of market opening and competition at wholesale and retail levels has been significantly strengthened by specific provisions in the 3rd Package (Article 37 of Electricity Directive 2009/72/EC, Article 41 of Gas Directive 2009/73/EC, and Article 11 of ACER Regulation 713/2009).  Going forward, ACER is required to publish an annual report on the results of its monitoring, identifying therein any barriers to the completion of the EU electricity and gas markets.

The nuts and bolts of future energy retail market monitoring
Against this background ERGEG, in its current public consultation paper, proposes four areas (covering 19 indicators) be used by all energy regulators to monitor the level and effectiveness of market opening and competition. This 19 indicators identified are the result of an examination of current monitoring exercises and national practices and stakeholder inputs gathered at a technical workshop held on 5 November 2009.

The particular focus is on the processes in which a customer interacts with the energy markets. Thus the indicators cover not only areas of the competitive energy market but also those areas of the monopoly market where a customer interacts with a service provider.  The four broad areas are (1) customer satisfaction (2) retail market outcomes (3) market structure and (4) market condition and Distribution System Operator services. 

For each of the 19 indicators (which includes for example switching rates or percentage of customers served by a DSO that has/does not have separate branding from its vertically integrated utility). A table summarises the ERGEG recommendation for each of the indicators including the data to be collected and the frequency and sources of collection. The collection of data in a consistent format should assist ACER in its future monitoring duties.

Following the end of the public consultation (on 16th June), the responses will be evaluated and the final Guidelines of Good Practice (GGP) for retail market monitoring by national regulators and ACER will be published in time for the 3rd Citizens’ Energy Forum (i.e. London Forum) in Autumn 2010.


Press Release:
•  ERGEG publishes the Status review 2009 on CAM and CMP for storage, E10-GST-09-03, 16 April 2010

Events (see Events section of website for the new calendar of next workshops) :
• 10 year gas network development plan, Brussels, 14 June 2010 - TBC

Calendar of current and future public consultations

Area Issue Consultation
publication date
Gas Guidelines of Good Practice on CAM & CMP to storage facilities TBD
  Input to the Framework Guideline on gas balancing rules TBD
  Framework guideline on gas transmission tariffs TBD
Electricity Position paper on smart grids December 2009 - 
March 2010
  Call for evidence on incentives schemes to promote cross-border trade in electricity January -
March 2010
  Call for evidence on generation adequacy March -
April 2010
  Draft benchmarking report on medium and long-term electricity transmission capacity allocation rules March -
May 2010
  Framework guideline on electricity capacity allocation and congestion management July -
September 2010
  Framework guideline on electricity grid connection TBD
  Framework guideline on operational security / system operation TBD
  ERGEG advice on comitology guideline on electricity transparency TBD
Customer Draft GGP on Indicators for retail market monitoring April -
June 2010
  Draft GGP on regulatory aspects on smart metering gas and electricity June - July 2010
Cross Sectoral CEER response on interdependencies with other markets TBD

The standard period for ERGEG public consultation is 8 weeks. See the public consultations section of the website.   


See all dates of Regional Initiatives meetings (RCC, IG, SG) on the ERGEG online Calendar.  

Regional Initiatives Update


Region in the Spotlight - Relieving bottlenecks on borders within the Central West region

The Central-West electricity (CWE) region published recently its “Regional reporting on electricity interconnection management and use in 2008”. This is the first regional monitoring report of its kind in this region.  Others are being developed in other regions  (e.g. SW and FUI have also published their reports).

The creation of a single European electricity market is curtailed by the lack of sufficient interconnections which results in cross-border congestion between Member States. National Regulatory Authorities, inter alia, aim to ensure that congestion management methods currently applied in Europe are efficient.

The regulators of the CWE region have taken stock of the current state of congestion management in the region and its recent improvements. The results feed into the Electricity Regulation Compliance Report exercise undertaken at European level.  It has a further goal of helping National Regulatory Authorities to reach not only a common understanding about the functioning of congestion management methods, but also to take a common view about how to further improve their effectiveness. In addition the report should help market parties to get a better understanding of the effectiveness and the efficiency of congestion management methods.

The analysis of the use of interconnection confirmed some aspects and identified some others where further improvement is necessary:
• In 2009 long-term auction rules were enhanced, firmness was increased and Use-It-Or-Lose-It (UIOLI) was generalised. Nonetheless, the issue of firmness is not closed yet and work is ongoing at European level.
• The establishment of the CASC-CWE central auction office by the TSOs has been appreciated by market players. The Central-South region is currently investigating the possibility for CASC to operate as the auction office also in their region.
• For day-ahead, the Tri-Lateral Coupling (FR-BE-NL) has permitted an efficient use of interconnection. On the other hand the absence of market coupling between Germany, France and The Netherlands induced an important loss of social welfare. The introduction of CWE market coupling is expected to be of great benefit to the whole region.
• Cross-border intraday trades are expanding, though overall they still remain rather low. Cross-border balancing exchanges are still limited to the participation of German market participants in the French balancing market.
• Comparing physical flows and commercial exchanges has shown great differences. The flow-based approach for market coupling – currently under investigation by TSOs – could be an improvement in this regard.

The regulators of the CWE electricity region invited comments that could lead to an improvement of this reporting exercise. Furthermore, this report focused on the internal borders of the CWE region but the analyses may be extended to other borders.

ERGEG is currently carrying out a public consultation on the ERGEG Benchmarking report on medium and long-term electricity allocation rules. The document aims to identify best practices and to further improve the level of harmonization of long-term products. This work will be a step towards the elaboration of a single European set of auction rules.  

International Activities

The second roundtable between EU (represented by CEER) and Ibero-American (represented by ARIAE) energy regulators took place on 8 April 2010 in Madrid in the context of the Spanish Presidency of the EU Council.   Topics addressed included (a) energy regulation and security of supply (b)  energy regulation and climate change and (c) energy regulation and supply to consumers. View the conclusions of the CEER-ARIAE April 2009 regulatory roundtable.

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European Energy Regulators' News is a free, electronic newsletter and covers the period from the previous issue to the date of publication. It is your gateway to the news from Europe’s energy regulators, press releases, public consultations, advice to the European Commission, news from the Regional Initiatives, and regulation and policy developments at a national level.

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