March 2011

Issue: March 2011

If this e-mail is not displayed correctly, please click here!

Feature

- Review of the process for drafting Framework Guidelines - lessons from the interim period

Publications

-  Framework Guideline on Gas Balancing
- Review of the Framework Guidelines development process
- Evaluation of Responses to the consultation on the draft Framework Guideline on Capacity Allocation and Congestion Management for electricity
- CEER Evaluation of Comments on gas target model
-  CEER Comments on the EC's consultaion on the Energy Roadmap 2050
-  CEER Comments on the EC's consultation on alternative dispute resolution.

Region in the Spotlight

-  Action Plans of South gas and South-West electricity regions. 

Events
- CEER Gas Target model workshop, 11 April, London (also live webstream)
- ICER/CEER workshop on regulatory practices for the promotion of Energy Efficiency, 12 April, Brussels

Editorial
The 3rd March 2011 is a watershed date in EU energy regulation.  It marks the official opening of the Agency for the Cooperation of Energy Regulators (ACER) in Ljubljana, Slovenia. It also marks the date of transposition of (most aspects of) the 3rd Package by Member States into national law.

Aside from the official opening ceremony and a conference on 3rd March, ACER also launched its first public consultations; one on the framework guidelines on gas capacity allocation mechanisms and the other on electricity grid connection. These (and other Framework Guidelines) are the result of months of preparatory work by ERGEG (the forerunner to ACER) the goal of which is to set out clear and objective principles for the development of network codes by the ENTSOs that will enhance EU market integration. The feature article (below) is on ERGEG's review of the process for drafting Framework Guidelines and the lessons from the interim period.

On 10th March, ERGEG submitted to the European Commission its Framework Guideline on Gas Balancing. ERGEG also published the Evaluation of Responses to the consultation on the draft Framework Guideline on Capacity Allocation and Congestion Management for electricity (the Framework Guidelines themselves had already been sent to the Commission in February).

Also published this month was CEER’s contribution to two consultations by the European Commission: one on the Energy Roadmap 2050; the other on alternative dispute resolution.

The European Regulatory Gas (Madrid) Forum on 21-22 March focused, inter alia, on 3rd Package implementation, the Framework Guidelines, the Energy Infrastructure Package and the EU’s proposals on energy market integrity rules and the Regional Initiatives. In the spotlight this month are the action plans of two regions (South gas region and South-West electricity region).

In advance of the next CEER workshop on the gas target model (11th April) and the webinar on the FSR study (7th April), CEER published an evaluation of comments received from stakeholders.

CEER and the International Confederation of Energy Regulators (ICER) are hosting a workshop on regulatory practices for the promotion of energy efficiency on 12th April, during Europe’s Sustainable Energy Week. Highlights of the programme include lessons from the US, work by the IEA, the ICER report and the Commission’s new Energy Efficiency Action Plan. To register for the event, log on to the Sustainable Energy Week website http://www.eusew.eu/

Review of the process for drafting Framework Guidelines - lessons from the interim period

A review as part of the handover from ERGEG to ACER
European Energy Regulators were asked by the European Commission to work, during the 18-month interim period before ACER became operational on 3 March 2011, on the development of draft Framework Guidelines. The aim was to accelerate progress so that ACER could hit the ground running on 3rd March (which it has done).

The European Commission and the European Network for Transmission System Operators (ENTSOs) for electricity and for gas agreed to work ‘as if’ the 3rd Energy Package were in place. As the work has been done on a voluntary basis, ERGEG’s review of the process for drafting Framework Guidelines assesses whether the process followed by ERGEG is robust enough and provides a sound basis on which ACER can rely (see February Newsletter on the reasons for the handover from ERGEG to ACER). It contains a summary of the overall feedback received from regulators, the Commission and stakeholders and the resulting recommendations made to ACER.

What process did ERGEG follow in preparing draft Framework Guidelines?
ERGEG’s basic process was to:
- Identify priority Framework Guidelines (FGs) following consultation with
stakeholders, subsequently informally endorsed by the European Commission;
- Undertake an Initial Impact Assessment (IIA) on our own initiative (not stipulated
in the legislation);
- Establish a workstream responsible for drafting the relevant FG composed of
representatives from different national regulatory authorities (NRAs);
- Engage stakeholders in a number of ways:
o establish an ad hoc expert group in each framework guideline area;
o establish an Ad Hoc Advisory Group (AHAG) in the case of electricity
Capacity Allocation and Congestion Management (CACM);
o hold bilateral meetings with key stakeholders and the European Commission;
o host public workshops for all interested parties;
o engage informally and regularly with the ENTSOs; and
o undertake formal public consultations on the proposals (minimum 8 week
consultation periods).

How did we conduct the review?
The review is based on the result of questionnaires sent to stakeholders and regulators involved in the process. Interviews were conducted with the European Commission and the ENTSOs, as well as with some regulators.

Recommendations
Overall, the process the European Energy Regulators have followed was assessed positively, but some improvements could be made to its operation which would enhance the trust of stakeholders in the outcome. However, there are serious tensions between the desire to enhance the process and the resource implications of doing so and a careful balance will be needed to set ACER’s ambitions at a level which is actually achievable.

Timeline
12 months should be planned as the ‘normal’ period for the development of each framework guideline (FG) rather than assume that all work can be done within the 6 months formally allowed in the regulation;2 this means that ACER should start working on each FG around 6 months ahead of the start of the official 6 month period.

Scoping/Initial Impact Assessment (IIAs)
The ‘scoping’ phase is extremely important and should involve ACER the Commission and the relevant ENTSO aim so that the overall aim of the FG/ network code process is clear.  In line with regulators' findings, stakeholders identified IIAs as major point of interest. Regulators believe that more resources would be needed if Initial Impact Assessments (IIAs) were to of a higher standard. However, the reality is that the resources (including expert resources) of NRAs are under growing pressure and, realistically, no more resources from NRA or ACER funds are likely to become available for this purpose.

Consultation
Overall the main request from stakeholders is for early involvement in the FG development process. The effect of the very short statutory timeline has been that in every case so far, the process for the preparation of FGs has resulted in public consultation taking place only at the stage when policy proposals were already quite fully developed. Overall, the level of resources committed to this work by stakeholders is considerable (as it is for regulators). It may be that simplified information could be included in a basic ‘fact sheet’ to accompany each FG consultation which could assist smaller players in targeting topics of interest to them, and could also be a handy tool for the other players involved.

Overall picture
The request of some stakeholders for a full picture of the architecture of the FGs and network codes depends upon there being a well defined and comprehensive target model which the FGs and codes are designed to implement. This is currently being done in gas, exists already in electricity in relation to congestion management and capacity allocation, but it does not currently extend to other important areas such as tariffs and investment Regulators should consider whether such a model should be developed as an aid to the development of FGs and network codes, as well as to the consideration of future code modification proposals.

CEER/ERGEG Publications and Events

Calendar of current and future public consultations