March 2021 View this newsletter in your browser here.

 

Editorial

Spring has arrived, at least meteorologically, but it seems that the better year ahead that we are hoping for may arrive somewhat later than warmer weather. In the meantime, CEER has been very active and looks forward to our first-ever annual conference in a virtual (online) format next week (see below).

March also brings a new member to CEER’s Board of Directors: Mr Pedro Verdelho, Executive Board Member of the Portuguese Energy Regulator (ERSE). We welcome Vice President Verdelho, who continues to chair CEER’s Gas Working Group as well.

Upcoming Events

30 March 2021, 13:00-15:30 CET: CEER Annual Conference 2021 – Dynamic Regulation in Practice: The energy sector during the pandemic and Energy Transition 
The CEER 2021 Annual Conference represents one of our flagship events of the year and will have a keynote address by EU Energy Commissioner Kadri Simson. This year is the last year of our 3D Strategy, therefore the overall focus of the event is on the last “D” Dynamic Regulation.

The dynamic regulation naturally ties in the two sessions. Session one will develop around the topic of the pandemic's effects on the energy sector, presenting recent research by CEER and the International Energy Agency (IEA). Session two will show how regulatory frameworks can be adapted in light of sector integration that enables the energy sector transition. You can register here.

Public Consultation

CEER is developing a new Strategy for the period from 2022 to 2025. The "Empowering consumers for the energy transition" Strategy outlines the overall policy strategy for European energy regulators with a view to promoting the energy transition and contributing to a carbon-neutral society and economy. Please see the draft strategy document for more details about the consultation and the questions contained in the feedback questionnaire. This brief public consultation will be open until 30 April 2021 and is carried out through a dedicated online questionnaire.

Please access the questionnaire here.

Publications

  • 5 March: ACER-CEER Paper on Improving the Proposed TEN-E Revision. In the knowledge that new legislation soon would be proposed to revise the Trans-European Energy Networks (TEN-E) Regulation, in June 2020, ACER and CEER published a general position paper on improving the TEN-E Regulation. On 15 December 2020, the European Commission published a proposal for such a revision. The 5 March ACER-CEER Paper provides a much more specific response to the European Commission’s proposal. ACER and CEER welcome the adaptation of the TEN-E Regulation to the policy goals of the EU Green Deal but see room for improvement in a number of areas from a regulatory viewpoint. In ACER and CEER’s view, the legislative proposal should be further improved to promote a neutral and independent technical assessment of infrastructure projects, to ensure those projects bringing most benefits for the European Green Deal are supported and to avoid any risks of unjustified costs to European consumers. This 5 March paper was submitted to the European Commission as CEER’s official feedback on the proposed legislation.

  • 11 March: Report on Regulatory Frameworks for European Energy Networks 2020. This report analyses different regulatory systems of electricity and gas networks (at the TSO and DSO level) in most EU Member States, Great Britain, Northern Ireland, Iceland and Norway. The report provides a general overview of the regulatory practices in place, the calculation of a rate of return, the determination of the regulatory asset base (RAB) and the depreciation of assets in the different regulatory systems. For more, see our feature section below. 

  • 23 March: Report on Billing Issues in the Clean Energy for All Europeans Package. This report presents a useful overview of the changes to billing and billing information for electricity customers introduced by the Clean Energy Package (CEP) and the recast Electricity Directive, with a view to strengthening the position and participation of consumers in the energy market as well as in the clean energy transition. The report highlights the increasing amount of information provided, which may not help the consumer and who may feel overwhelmed and less able or willing to take on the information, and hence, more exposed to risks of misleading and unfair practices.  The report discusses new “switching package” information, which may increase consumer awareness and decrease practical barriers to switching suppliers.  Digitalisation-enabled new ways of communicating information and data offered are also considered in the report. The new rules allow for thinking “outside the box” and developing new, innovative concepts for billing. CEER proposes various improvements in the paper, as well as inserts five case studies of innovative practices. 

  • On 9 March, CEER also responded to the European Commission’s request for feedback on its combined roadmap / Inception Impact Assessment on a Hydrogen and Gas markets Decarbonisation Package.

Stakeholder communications questionnaire

This questionnaire seeking your feedback on CEER’s public communications methods closed on 17 March and CEER received 54 responses. CEER thanks all who took the time to respond and will share that feedback in a general way in an upcoming CEER Newsletter.

Recent events

On 17 February, the Distributions Systems Working Group organised a second webinar in the series on data accessibility. The first webinar took place 10 February. This second webinar focused on system data and attracted over 160 attendees.

It was opened by Thomas Hölzer from BNetzA sharing the regulatory perspective and explaining what the System Operation Guideline (SOGL) already in place does for data, particularly on the Key Organisational Requirements, Roles and Responsibilities (KORR). Next up, both the TSO and the DSO perspectives were heard. Inés Encabo Cáceres from REE (Spanish TSO) and ENTSO-E presented on how the SOGL implementation is going from the TSOs’ point of view and Michael Wilch represented E.DSO and shared insights from a study done by E.DSO and CEDEC showing the DSOs’ thoughts on data accessibility and implementation of KORRR.

Two national regulatory authorities (NRAs) experiences were shared, the British experience was presented by Louise van Rensburg (Ofgem) and Arianna Rossi (ARERA) addressed the Italian case. Afterwards, Marco Pasquadibisceglie from ARERA, who was the webinar coordinator, moderated a panel discussion with Inés Encabo Cáceres (REE & ENTSO-E), Marc Malbrancke (CEDEC), Jakub Fijalkowski (European Commission, DG Energy), Pat Brown (EPRI) and Thomas Hölzer (BNetzA), including questions from the audience.
The presentations and the recording of the webinar can be found here.

Feature

On 11 March, CEER published the Report on Regulatory Frameworks for European Energy Networks 2020. This is the 2020 version of a series of annual reports drafted and issued by CEER. It provides a general overview of the regulatory systems for electricity and gas networks in most EU Member States, Great Britain, Northern Ireland, Iceland and Norway in 2020. A major focus is placed on the calculation of a classic and adequate rate of return, the determination of the regulatory asset base (RAB) and the depreciation of assets in the different regulatory regimes.

Other factors may also influence the work of the regulated network operators or the decisions of investors, including for example, the time required for permitting processes or the overall stability of the implemented regime. However, these equally important aspects go beyond the scope of this report and are therefore not covered in this analysis. In respect to this, the reader should be aware that the parameters presented in this study must be interpreted in the context of a whole country-specific regulatory regime. As tariff regulation schemes are highly complex, a direct comparison of certain parameters, such as capital costs, is difficult and should only be done in the context of the whole regulatory system.

CEER addressed this challenge by undertaking a survey among CEER Members, which focused on the main elements for determining allowed revenues. This data was then subject to a basic comparison and a number of conclusions were drawn. Some of the main conclusions are:

  • For the method of asset valuation, the weighted average cost of capita (WACC) is the preferred method by many NRAs;

  • For the RAB, there are some variations among the surveyed NRAs. However, almost all NRAs include fixed assets in the RAB and more than half of the NRAs do not include working capital in the RAB; and

  • Straight line depreciation is applied by most NRAs for gas and electricity regulation, but the NRAs use different depreciation values.

The report is accompanied by several separate documents: a summary document, extensive tables in Annex 4 and an in-depth collection of case studies of nine countries found in Annex 5. Taking into account the import caveats above about country-to-country comparisons, this document nevertheless represents an essential document for being able to review the different energy regulatory regimes in Europe in a standardised way.

International

On 15-16-17 February, CEER organised a tailor-made online training on Energy Utility Benchmarking for the Regional Association of Energy Regulators of Eastern and Southern Africa (RAERESA).

 

This online training was implemented under the Memorandum of Understanding (MoU) between CEER and RAERESA to carry out capacity-building activities for African regulators. 39 participants joined this training from the Regional Energy Regulators Association of Southern Africa (RERA).

The programme was designed to allow the energy regulators in the Southern African region gain expertise in implementing compliance, performance-based and incentive regulation in setting network tariffs and carrying out benchmarking. The participants were able to discover and exchange experiences and lessons learnt on different benchmarking methodologies and gain new inputs on energy regulators’ benchmarking tasks. Scientific approaches and different methodologies were presented together with international and national practical examples from Europe. The participants also had the opportunity to exchange and learn from the experiences of other countries in the Southern African region.

Contact

Charles.Esser@ceer.eu

Tel Logo +32 278 873 36

www.ceer.eu

Unsubscribe from the CEER news alerts.