January 2009


European Energy Regulators’ News

Issue: January 2009

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Table of Contents

Cooperation on EU energy standards

Signing of CEER-CENELEC MoU, 13 January 2009

- 2009 Work Programme
- ERGEG/CESR advice on transparency, record-keeping and information exchange between regulators
- Principles for calculating tariffs for access to gas transmission networks-Evaluation of Comments

Public Consultations
- Revised GGP on Electricity Balancing Markets Integration
- Capacity allocation and congestion management in the natural gas transmission network

Press release
- Energy Regulators and EU Standardisation Committee to cooperate on EU energy standards
- ERGEG/CESR advice on how to promote transparency and market integrity in electricity and gas trading

- ERGEG/CESR advice on how to promote transparency and market integrity in electricity and gas

With Russia cutting its gas supplies in a repeat of the 2006 Russia-Ukraine gas dispute, the effect was felt in 18 EU countries. Eastern European and Balkan states (including 4 countries of the South-South East Gas Regional Initiative) were hardest hit as many citizens suffered without heat in freezing temperatures (see Region in the Spotlight for lessons from the gas disruption). 

The 3rd Package of energy legislation (consisting of 5 pieces of energy legislation) will provide a new framework for competition in the energy sector.  As the new Czech Presidency has announced the 3rd Package as being one of the major priorities of its EU-Presidency, Europe’s energy regulators are encouraged that the EU’s 3 co-legislators (European Parliament, Council and Commission) will grasp the opportunity to adopt the 3rd Package (which has now entered 2nd reading phase) before the end of current European Parliament’s mandate.

Long before the Russian gas crisis, in an effort to maintain political momentum for the 3rd Package, Europe’s energy regulators launched a consultation (Autumn 2008) on implementing the key elements of the 3rd Package. Now ERGEG has begun the New Year analysing the (34) responses to this public consultation on implementing the 3rd Package. 

ERGEG has launched 2 new public consultations. One deals with the proposed revision of ERGEG's December 2006 Guidelines of Good Practice on Electricity Balancing Markets Integration (GGP-EBMI), so as to include automatically-activated reserves and intraday markets.

The second consultation on gas capacity allocation mechanisms (CAM) and congestion management procedures (CMP) sets out ERGEG’s position on CAM and CMP for interconnection points between adjacent networks (cross-border as well within Member States), to be used as a basis for proposing modifications to the existing Gas Regulation (EC) 1775/2005.  It will serve as a background paper for the future Agency, which may be utilised in the development of the Framework Guidelines for the network codes.  A stakeholder workshop on gas CAM and CMP will take place in Brussels on 18 February 2009. 

At a signing ceremony in Brussels on 13th January (see Press Release) the energy regulators and CENELEC (the EU standards body) signed a Memorandum of Understanding (MoU) on Cooperation and Exchange of Information in the field of standardisation in the energy sector. Work is beginning on developing harmonised European standards in smart metering.

In the midst of the global financial crisis, this month’s feature article is on the publication of the ERGEG/CESR joint advice to the European Commission  on how to promote transparency and market integrity in electricity and gas trading.

ERGEG/CESR advice on how to promote transparency and market integrity in electricity and gas trading

ERGEG and CESR published the third part of their joint advice to the European Commission on how to foster fair electricity and gas trading. 

The European Commission asked ERGEG and CESR (its advisory groups of regulators on energy and securities issues respectively) to develop proposals for regulating trading in the electricity and gas markets. This included establishing the levels of transparency that market participants need before and after trading, and information which should be available to the regulators to allow an effective oversight of the market.

In delivering the second part of their advice to the European Commission (published 1 October 2008) ERGEG and CESR called for a harmonised transparency regime for so-called “fundamental data” and sector-specific legislation to prevent and detect market abuse in the electricity and gas market. Furthermore, the regulators encouraged the Commission to bear in mind that the integrity of related markets like emission allowances, oil and coal also play an important role for the functioning and price formation of the electricity and gas market. Following a public consultation (October – November 2008), ERGEG and CESR have now delivered the 3rd part of their advice to the Commission. Their proposals cover three issues (1) transparency (2) record-keeping and (3) information exchange between regulators.  

Transparency: Regulators recommend an EU-wide harmonised post-trade transparency scheme
In order to improve transparency of trading in the electricity and gas markets, ERGEG and CESR recommendations for European-wide harmonised post-trade transparency are:
   • Anonymous, trade-by-trade publication;
   • Timeframe: close to real-time within a max. of 15 minutes;
   • Scope: standardised electricity and gas supply contracts and derivatives;
   • Publication by platforms (i.e. regulated markets, MTFs, spot exchanges, broker platforms);
   • Access on a non-discriminatory and reasonable commercial basis.

Furthermore, energy regulators also recommend that aggregate data be published on a daily basis by the platforms. This information would also help market participants to estimate trends and developments for the following trading days.

Record Keeping: Practical approach to the 3rd Energy Package’s record-keeping obligations
The European Commission’s 3rd Package proposals contain new obligations for supply undertakings to keep records related to their transactions. To allow an effective oversight of electricity and gas trading, ERGEG and CESR propose that supply undertakings should be able, as a minimum, to provide data derived from their records, upon request from a regulator, in an electronic format.

Exchange of information between regulators
ERGEG and CESR recommend to start an exchange of information between regulators, upon request, on a case-by-case basis so as to ensure a proper oversight of the market. This requires a sound legal basis which should be provided by European legislation. 

For further information, see the joint ERGEG/CESR advice to the European Commission, the accompanying press release and the Responses to the Consultation.  

CEER/ERGEG Publications


See all dates of Regional Initiatives meetings (RCC, IG, SG) on the ERGEG online Calendar.  Events are by invitation only, unless otherwise stated. 

Regional Initiatives Update


Electricity and Gas Regional Initiative

 The European Energy Regulators have revised their monthly reporting practices of the Regional Initiatives in order to ensure more output-based information and updates for readers, as many of the issues addressed in the regions have a medium-term perspective. 

As a result, the European Energy Regulators' Newsletter will now present Quarterly updates of the 7 electricity regions and 3 gas regions. For the months in between these quarterly updates, the activities in one region will be presented in the "Region in the Spotlight" section. This will provide readers with more in-depth coverage of each region on a regular basis, supported by the quarterly 'tour-de-table" updates.

For continued information on activities in each region, please consult the Regional Initiatives website and the region's dedicated subpages.

Region in the Spotlight - South South East gas region 

On 7th January, Russia cut its gas supplies leaving tens of thousands of households in freezing temperatures and forced schools, hospitals and factories to close.  This dispute between the Ukraine and Russia, which was a repeat of their 2006 gas dispute over prices and debts, affected Russian gas supplies to 18 European countries.

The South-South East (SSE) region of the Gas Regional Initiative was particularly affected.  Austria, Bulgaria, the Czech Republic, Greece, Hungary, Italy, Poland, Slovak Republic, Slovenia and Romania participate in the South South-East (SSE) Gas Regional Initiative (GRI). 

4 of these EU countries of the S-SE region (Bulgaria, Slovak Republic, Poland and Hungary) along with non-EU Member States (Serbia, Bosnia-Herzegovina (BiH), Croatia and Moldova) were the worst affected, leading their governments to declare a state of emergency. Also strongly affected were Romania, Greece, Austria, Slovenia and the Czech Republic (non-EU Member States: TR, FYROM). The worst and strongly affected countries took different measures to satisfy basic energy needs:

   • reduction of gas consumption (e.g. industry)
   • regular energy crisis council meetings
   • diversification of transport routes and sources of natural gas (if possible)
   • increase of domestic production
   • full exploitation of storage capacity
   • switching to alternative fuels (coal and oil)
   • solidarity measures among industry players (Austria-Slovenia, Hungary-Serbia, Serbia-BiH).

Countries such as Germany, France, Italy and Netherlands were also affected by the supply disruptions, but these countries handled the situation via diversification of transport routes and alternative sources of natural gas and energy where possible.

It is possible that coordinated gas dispatching among the TSOs could have mitigated the emergency situation. Solidarity transports into the most affected countries in the SSE GRI would have been possible at a much earlier stage and in a more efficient manner if there had been a greater level of interconnection capacity, coupled with coordinated gas dispatching in the region.

A SSE GRI Stakeholder Group Meeting will be held on Friday, 30 January in Sofia, Bulgaria. The meeting participants will discuss the gas crisis, the initial lessons learned and the extent to which Gazprom should participate in the SSE GRI. The outcome of this meeting will be published on the SSE GRI section of the website.

International Activities

Mr. J. Kelliher has resigned as Chairman of the Federal Energy Regulatory Commission (USA).  President Barack Obama has named Jon Wellinghoff as Acting Chairman of FERC.  Mr. Wellinghoff has been a member of the Commission since 2006.  The U.S. Senate reconfirmed him to a full, five-year FERC term in December 2007.

Acting Chairman Wellinghoff is an energy law specialist with more than 30 years experience in the field. Before joining FERC, he was in private practice and focused exclusively on client matters related to renewable energy, energy efficiency and distributed generation.

About the European Energy Regulators' News

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