June 2011

Issue: June 2011

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Feature
- Steps towards the EU's Internal Energy Market

Events
- 4th CEER gas target model workshop 28 June (also live streaming). See calendar of next workshops

Publications
- CEER position regarding the ‘branding’ of ADR bodies
- ADR practices: case studies. Update to Annex 2 of GGP on Customer Complaint Handling, Reporting and Classification

 Region in the Spotlight
- ACER takes over co-ordination of the Regional Initiatives

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Over the course of the summer the European Energy Regulators News will get a facelift.  We would be grateful to hear from you on what aspects you do/don't like, what new content or features (e.g. social media) might be interesting for you as a reader. Please send comments to una.shortall@ceer.eu

Editorial
This month brings news of a death, but not a sad one.  This month 11 years ago a small group of regulators created an association, the Council of European Energy Regulators (CEER). Recognising the value of such voluntary cooperation by national regulators, in 2003, the European Commission decided to set up the European Regulators Group for Electricity and Gas (ERGEG) as its formal advisory group.  Since then CEER has worked as a preparatory body for ERGEG.  ERGEG has become a victim of its own success.  Under the 3rd Package of energy legislation, the Agency for the Cooperation of Energy Regulators (ACER) was established (in Slovenia). Unlike ERGEG, ACER has the status of being an EU Agency and has its own staff and resources.  Now that ACER is fully operational (since March 2011), ERGEG will be dissolved as of 1 July. 

We are proud of ERGEG’s legacy and of the many regulators who contributed to its success, such as Asta Sihvonen Punkka – a former Vice President of CEER/ERGEG. Asta was recently awarded the EURELECTRIC Award Honours Push For European Market Integration for her role in chairing ERGEG’s stakeholder platform for European electricity market integration.

Some of ERGEG’s work passes to ACER such as the (ERGEG) Regional Initiatives, and some of it to CEER.  Consequently, this June edition of this newsletter contains the very last “Region in the Spotlight”. It, fittingly, focuses on the steps that ACER is taking to coordinate the Regional Initiatives.

CEER will continue to exist in Brussels, dealing with many complementary (and not overlapping) issues to ACER’s work such as international activity, smart grids, sustainability issues and customer issues. Indeed, this month, CEER published 2 documents on Alternative Dispute Resolution (ADR) in the energy sector: the first is an updated of Annex 2 (case studies) of ERGEG’s (2010) GGP on customer complaint handling, reporting and classification; and the second is a position paper regarding the 'branding' of Alternative Dispute Resolution (ADR) bodies.

The feature article "Steps towards the EU's Internal Energy Market" is a forward look towards the challenging target of completing the Internal Energy Market  (IEM) by 2014 and some of the tools to help reach it (3rd Package implementation, 3-Year Plan, Energy Infrastructure priorities and the Gas Target Model).

 Steps towards the EU's Internal Energy Market

All eyes are on the 2014 target set by EU Heads of State (during the February 2011 European Council) for completion of the internal energy market.  But, in practice, what needs to be achieved and where are we now?

Implementation of the 3rd Package
Clearly, a first step is implementation of the 3rd Package.  The 3rd Package (of energy market liberalisation laws) puts in place many of the tools to get there – proper unbundling of the network operators, stronger and more independent regulators, regional coordination obligations (on Member States, regulators and network operators) in the pursuit of EU market integration, new EU bodies for regulators (ACER) and the network operators (ENTSO-E and ENTSOG) and (for the first time) the possibility of binding EU-wide network codes.

Responsibility lies with the Member States to transpose the EU Directives into national law (which should have been done by March 2011) and with the European Commission, as guardian of the treaties, to take action against the offending Member States for failing to do so.  Unfortunately, transposition remains slow across Member States.

ACER, for its part, will report on progress toward the internal energy market.  The Regional Initiatives, under ACER’s leadership, are also now being focused on the results they should deliver by 2014 (see “Region in the Spotlight” below).

Coordinated 3-Year Plan of the rules that need to be put in place
Another key element will be to put in place the necessary set of rules for a fully-integrated pan-European market.  This means preparing the necessary Framework Guidelines (drafted by ACER), which shape the resulting Network Codes (drafted by ENTSOs).  These will tackle on an EU-wide basis key issues such as how to deal with congestion, how to allocate capacity and how balancing markets should function.

A process, led by the European Commission, coordinates the work of ACER and the ENTSOs in the form of a 3-Year Plan (one for electricity, another for gas). The Commission has consulted stakeholders on the priorities for 2012 and beyond and (together with ACER and the ENTSOs) has examined the delivery of the  Framework Guidelines and the resulting Network Codes in view of specific priorities to achieve the 2014 objective. The resulting 3-Year Plans are presented at the bi-annual EU regulatory fora (Florence Forum for electricity, and Madrid Forum for gas) and, of course, are reflected in the individual work plans of ACER, ENTSO-E and ENTSOG (currently being prepared for 2012). 

Energy infrastructure priorities
Making the internal energy market a reality necessitates having a reliable and coherent energy network in Europe and this depends on having the requisite levels of infrastructure investment (and of course access to that infrastructure).

In November 2010, the European Commission issued a communication on Energy Infrastructure which identified the range of infrastructure needed (in the order of 200 bn Euro) and set out its plans for legislative proposals.  Since then the CEER has assisted the Commission in its follow up work in providing both data and regulatory expertise, notably on cost allocation and financing measures. This included workshops organised by the Commission with Member States experts (i.e. with national regulators and Member State representatives) on permit granting and on the selection criteria for a list of EU ‘projects of common interest”. The Commission’s legislative proposal (expected in autumn) is likely to include cost allocation principles and measures to accelerate permitting.

Gas Target Model
In electricity, the target model for congestion management exists. But what does a single European gas market model mean in practice? CEER has taken the lead in developing a non-binding gas target model which builds on the work over a number of years on entry-exit tariffs and hub to hub trading which are the basis of the Gas Framework Guidelines as well as the work in the Regional Initiatives. 

Stakeholders have contributed to this work through the call for evidence, three public workshops, two formal stakeholder roundtables, position papers and bilateral meetings.  At today's (28th June) public workshop on the gas target model, the regulators will launch their latest thoughts on the subject.  CEER’s vision of a sustainable internal gas market is based on a core objective of enabling functioning wholesale markets where they do not exist yet. Furthermore, markets need to be connected better to move forward to an integrated market. This step of connecting markets is based on the implementation of capacity allocation mechanisms (CAM) and congestion management procedures.

The gas target model hopes to deliver
• Efficient use of existing infrastructures
• Well-functioning wholesale markets in all of Europe
• Connected functioning wholesale markets in all of Europe
• Secure supply patterns that ensure gas flowing to Europe

Next Steps
CEER plans to run a public consultation on the proposed target and present stakeholder feedback at the next Madrid Forum (26-27 September).

CEER Publications and Events

Publications:
• CEER position regarding the ‘branding’ of ADR bodies  (Ref. C11-RMC-48-06)

International Activities

The International Confederation of Energy Regulators (ICER) has launched its 2012 Distinguished Scholar Awards. Deadline for candidate papers is 1 November 2011.

Regional Initiatives Update

As of 1 July (the date of the dissolution of ERGEG), the Regional Initiatives will become a feature of ACER’s website (including information on Implementation Group and Stakeholder Group meetings in the regions).  Consequently, this June edition is the final time to report on the "Region in the Spotlight" in this newsletter.

                                                    ACER takes over co-ordination of the Regional Initiatives

Under the 3rd Package responsibility for the co-ordination of the (ERGEG) Regional Initiatives transfers to ACER.  A core focus of the Regional Initiatives, under ACER's leadership, is on completion of the Internal Energy Market by 2014. 

Currently lead regulators of the (7 electricity and 3 gas) regions are submitting regional  workplans (2011-2014) to ACER and the European Commission. ACER will prepare a pan-European Energy Work Plan 2011-2014, in order to focus the Regional Initiatives on the results they should deliver by 2014.  ACER is identifying priority areas for the completion of the internal energy market and will monitor progress/obstacles in the implementation of these projects. 

ACER's progress reviews of the cross-regional implementation projects (such as single EU price market coupling in electricity)  will be presented to the Florence/Madrid fora and will be posted publicly on the ACER website. 

International Activities

The International Confederation of Energy Regulators (ICER) has launched its 2012 Distinguished Scholar Awards. Deadline for candidate papers is 1 November 2011.

About the European Energy Regulators' News

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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 and regulatory and policy developments at EU level.

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