This month’s feature is on the unbundling of Distribution System Operators (DSOs), with the recent publication of CEER’s Status Review on the DSO unbundling and closed DSOs.
Shale gas, cyber security (which is a growing concern in the US) and market monitoring were the hot topics at the 10th EU-US Energy Regulators Roundtable, held this month in The Hague (see the International Section).
We are pleased to announce that the second annual CEER Customer Conference will take place on 19 June in Brussels. The main theme of the conference is on the path towards achieving the 2020 Vision for Europe’s energy customers. This CEER-BEUC Vision received widespread support at the 2012 Citizens' Energy Forum (the London Forum). Progress towards the Vision will be monitored at the European Commission’s annual London Forum. Register now for our Customer Conference.
Status of the Unbundling of Distribution System Operators (DSOs)
The CEER has just published a Status Review on the unbundling of Distribution System Operators (DSOs). See the report and citizens’ Q&A.
What are DSOs and why are they important? Distribution is the transport of electricity and gas on low and medium voltage (electricity) and medium pressure (gas) networks. Distribution System Operators (DSOs) are an important actor in the energy sector. Their duties not only include the delivery of electricity and natural gas to customers through the operation and maintenance of distribution systems, but we now see that DSOs are playing a role in the efficient functioning of Europe’s energy markets, acting as “entry gates” to retail markets in most countries, making them an important influence on the level of competition as well.
The legal requirement to unbundle The EU's (2009) 3rd package of energy laws requires the separation (or unbundling) of the vertically integrated energy companies, resulting in separation of the various stages of energy supply chain (generation, distribution, transmission and supply). For DSOs with more than 100,000 customers, they must be legally and functionally separated from their parent companies.
Why is unbundling important? The basic principle behind the requirements to unbundle is to promote and maintain competition in energy markets, ensuring a greater choice for consumers and thus applying pressure on energy companies to offer the best possible value and services. DSOs are encouraged to act as neutral market facilitators, fostering fair competition between suppliers in the retail market.
This CEER report monitors the status and real implementation of the DSO unbundling requirements EU national governments were required to transpose the rules into national law by March 2011.
Key findings of the CEER report • There is limited progress on DSO unbundling in countries which have yet to fully transpose the 3rd Package. In many countries, the process of unbundling is on-going and it remains too early to fully evaluate the results. • In those countries where unbundling has taken place, the rebranding of DSOs is sometimes not fully satisfactory and could still leave room for confusion among customers. • In general, NRAs found that the majority of DSOs have sufficient resources to fund the unbundling process. • Most countries do not have closed distribution systems (i.e. the classification of systems which distribute energy in a confined industrial or commercial setting and not to household customers).
The CEER report concludes that the role and potential of DSOs should be better recognised and reconsidered, particularly as new technologies and market models come into play through renewables, energy efficiency, smart networks, distributed generation and demand side management measures.
Going forward, CEER will continue its monitoring of DSO unbundling. Data management and DSO services: on the path towards improving customer satisfaction will be a topic of our 2013 customer conference.
• CEER Status Review on the Transposition of Unbundling Requirements for DSOs and Closed Distribution System Operators (Ref: C12-UR-47-03)
International
EU and US regulators met for the 10th EU-US Energy Regulators Roundtable in The Hague on 8-9 April. Shale gas, cyber security, market monitoring, consumers and unbundling were the main focus of the discussions of regulators from Europe (CEER and ACER) and from the National Association of Regulatory Utility Commissioners (NARUC) and the Federal Energy Regulatory Commission (FERC).
They identified a series of challenges on the horizon, such as cyber security and the protection of critical assets, and data management challenges if network operators are to maximise the value of huge data volumes which flow from smart grid technologies. See interesting presentations and Conclusions of the EU-US energy regulators roundtable.
CEER also shared experiences internationally in a (closed) workshop on transmission network investment regulation organised by the International Confederation of Energy Regulators (ICER) and GO15 (associaion of Very Large Power Grid Operators).
