February 2010


European Energy Regulators’ News

Issue: February 2010

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- The building blocks of a secure and interconnected EU electricity grid

- See calendar of next workshops

- Open letter on the establishment of ad hoc expert group on gas balancing
- Open letter on the establishment of ad hoc expert group on electricity system operation

Region in the Spotlight
-  North West gas region's advice on how to enhance a regional investment climate

A major objective of the European energy regulators is to ensure that stakeholders are properly involved and consulted in the process of producing framework guidelines for legally-binding network codes.  As well as extensive public consultation this can include the set up of informal ad hoc “expert groups” which will provide technical support to the regulators. This month, through an open invitation published on the website, any interested person can apply to join an ad hoc expert group on electricity system operation, and a separate expert group on gas balancing.  The deadline for experts is 2 March (electricity) and 5 March (gas).

European energy regulators held 4 public workshops this month, each one linked to a public consultation. The first was on the pilot draft framework guideline on gas capacity allocation (CAM) and the draft advice on comitology guidelines for congestion management (CMP). Next came a workshop on the integration of wind into the EU’s electricity market. It (and the accompanying consultation document) examines market issues which would facilitate more wind (e.g. bidding closer to real time and balancing) as well as network access arrangements. On the same day, ERGEG held a workshop on its draft advice to ENTSO-E for the development of the Community-wide 10-year electricity network development plan (TYNDP). See the feature article below on the building blocks of a secure and interconnected EU electricity grid. On a related theme, the regulators are also consulting on electricity cross-border incentives schemes. 

The 4th workshop was on complaint handling, which will feed into the finalisation of (voluntary) ERGEG guidelines of good practice on customer complaint handling.  Meanwhile, in the regions, the North West gas region of the Regional Initiatives is in the spotlight, with the region's regulators issuing their advice on how to enhance investment climate in gas transmission capacity in 2010-2011. The advice addresses the building blocks of a regional investement climate.  It identifies 7burderns for cross border investment and sets out 7 simple recommendations, based on NW-experience.

The building blocks of a secure and interconnected EU electricity grid

The need for TSOs to co-ordinate and align their grid development at regional and European level
Before the liberalisation of electricity markets, Transmission System Operators (TSOs) developed their networks/grids mainly to meet national needs. But, to enhance cross-border trade and integrate national markets an increase in transmission capacity across borders is needed. Otherwise, congestion on borders will prohibit the efficient functioning of the market, TSOs should co-ordinate and align their network development at regional and European level. Joint network planning at European level should ascertain whether enough transmission capacity is available for national, regional and European needs and that investment is made where most needed.

The 3rd Package – the first EU-wide 10-year network development plans
The (2009) 3rd Package of energy laws includes provisions on joint grid planning and requires the European Network of Transmission System Operators for Electricity (and also for Gas; ENTSO-E and ENTSOG respectively) to publish a (non-binding) Community-wide 10-year network development plan (TYNDP) every two years. The draft plan shall be submitted to the Agency for the Cooperation of Energy Regulators (ACER) for its opinion. In addition, if ACER identifies inconsistencies between a national 10-year network development plan and the Community-wide TYNDP it may recommend to amend the national or Community-wide 10-year network development plans. Afterwards, ENTSO-E shall adapt and publish the plan and ACER will monitor its implementation. ACER will also report to the Commission on the plan’s implementation.

What should be in the Community-wide 10-year electrcity network development plan?
With this mind, ERGEG held a workshop (11 February) on its draft advice to ENTSO-E on the
development and content of the Community-wide 10-year electricity network development plan. (Note with respect to gas: ERGEG held its 3rd workshop on the 10-year gas network development plan on 26 January).
ERGEG believes that the Community-wide TYNDP should be more than just the sum of national plans. It should give as reliable a view as possible of the integrated European electricity market and the infrastructure needs. It should also aim to help make investment decisions in a timely manner and to coordinate neighbouring TSOs on cross-border infrastructure development, even if the investment process may be managed at a regional or national level. ERGEG believes it should identify congestion on interconnections as well as internal congestion having an effect on cross-border activities. In particular it should focus on

- Development of infrastructure for generation to be introduced to the European market and to provide for meeting demand (supplying consumption);
- Removal of internal and cross-border bottlenecks;
- Security of supply.

The content of the TYDP should include:

-  Status review of the previous plan (explaining what has been achieved and any deviation);
-  Scenario development (i.e. snapshots of possible future situation/development – these “scenarios”
   should be coherent across the EU and European scenarios should be fed into the regional and national
   scenario processes;
-  European generation outlook;
-  Modelling of an integrated system;
-  Evaluation criteria for reinforcements;
-  Assessment of system resilience present and future (existing and decided infrastructure, future
   congestions, identification and description of investment projects).

As well as setting out the content of the TYNDP, ERGEG’s paper presents the evaluation criteria - both technical and economic - when alternative reinforcements are compared and also the specific regulatory criteria to be applied in the opinion-forming process.

Next steps
ERGEG’s draft advice will provide guidance to ENTSO-E in developing its first TYNDP which is expected, following public consultation by ENTSO-E, by June 2010. ERGEG will use this daft advice when giving its “duly reasoned opinion” on ENTSO-E's first Community-wide 10-year network development plan. In addition, ERGEG will also, in the next days, seek stakeholder views through a call for evidence on electriciy generation adequacy treatment. 

CEER/ERGEG Publications

• Open letter on the establishment of ad hoc expert group on gas balancing, deadline 5 March 2010
• Open letter on the establishment of ad hoc expert group on electricity system operation, deadline 2 March 2010

Events (see Events section of website for the new calendar of next workshops) :
• Framework guideline on gas capacity allocation and comitology guidelines for congestion management,
  Brussels, 2 February 2010
• Electricity 10-year network development plan, Brussels, 11 February 2010
• Integration of wind generation, Brussels, 11 February 2010
• Customer Complaint handling, Brussels, 25 February 2010

Calendar of current and future public consultations

Area Issue Consultation
publication date
Gas Guidelines of Good Practice on CAM & CMP to storage facilities April - 
May 2010
  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 TBD
  Framework guideline on electricity grid connection TBD
  Framework guideline on electricity capacity allocation and congestion management 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 -
May 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 - North West gas region's advice on how to enhance a regional investment climate

In 2009, using a virtual case study, the GRI North-West  gained valuable insight into the northwestern European investment climate for cross-border infrastructure. The virtual case study involved analysing the (hypothetical) economic feasibility of the construction of a specific pipeline. Based on the case study’s findings, which have been recorded in the journal of findings, the GRI formulated its policy advice. The GRI NW has subsequently drawn up recommendations on how to address the (7) burdens encountered in (actual) current regional investment processes. The most important areas for improvement are coordination, compensation methods, and transparency regarding investment processes. The RCC, comprising the nine regulators of this region, approved this advice on 2 February 2010. Other stakeholders endorsed these recommendations as well.

The RCC is currently working on drafting an action plan. The plan’s is primarily focused on the implementation of the recommendations in the cross-border investment projects, the investment decision of which has yet to be taken. The plan will be further discussed at the RCC meeting of 31 March 2010.

The whereabouts of the case study
The case study, called the Virtual Test was a sped-up simulation of feasibility study of a 10-20 bcm gas pipeline from France to Germany, via the Netherlands and Belgium. In real world such a pipeline was estimated to cost approximately 2,4 billion Euro and a feasibility study would take much longer.
In this study four regulators, the relevant gas operators and market parties worked together and presented interim results to the Ministries of the region. The project included the identification of a need for capacity, establishing potential investment costs, using a market test and completing the allocation of capacity in a virtual project environment (further referred as Virtual Test approach). The project specifically allowed “Greenfield” thinking on investment context. Many parameters had to be considered when studying the investment context, notably including the regulatory status of the pipeline, the way the investment is remunerated, the structure of markets linked. The development of a Virtual Test case (with workshops held during February, May and September 2009) on a North-West European investment situation created an opportunity to better understand how all the relevant parameters interact in an investment process, and how to address identified issues to facilitate a common regional approach to capacity development.

The interest to the project was marked by participation of 10 "Virtual shippers" (E.ON; EDF; StatoilHydro; Poweo; BP; Merrill Lynch; ExxonMobil; RWE; GazProm Marketing & Trading; Gas Natural) who bid for capacity, using specially developed shipper profiles.

A Manual is accompanying the policy advice and provides a reference of the investment regulation approaches across 9 different Member States of the North-West gas region. It is in itself a static “snapshot” (as of September 2009) of 9 regulatory investment frameworks across the region, in combination constituting the regional investment climate. It is also possible to apply lessons learned in the Virtual Test (conducted in frameworks of Germany, the Netherlands, Belgium and France) to, at least, the regional level. There are sufficient commonalities in structure of all the national investment frameworks in the region.

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