April 2009

Issue: April 2009

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Table of Contents
Feature
- CEER review of sustainable development in the energy sector

Publications
- ERGEG's Conclusions on Article 22 (exemptions)
- Status review of sustainable development in Europe

Workshops
- ERGEG Workshop on draft GGP  on grid connection and access
- ERGEG-GTE+ Workshop on 10-year development plan

Region in the Spotlight
- South Gas Region

International
- first CEER-AFUR regulatory roundtable

World Forum on Energy Regulation WFER IV
Athens,18- 21 October
- early bird registration extended until 31 May
- confirmed speakers include:
EU Energy Commissioner Andris Piebalgs;
Frederick Butler, NARUC, USA; Mario Monti,  former EU Competition Commissioner;
Stephen Littlechild, Professor, Universities of Birmingham and Cambridge; and many more distinguished speakers 

Editorial
On 22 April, the European Parliament (EP) adopted, by a large majority, the compromise texts agreed between the EP and the Council in informal trialogue negotiations on the 3rd energy liberalisation package of energy legislation (see texts adotped by EP).  The "3rd Package” comprises five legislative texts (the electricity and gas Directives, the electricity and gas Regulations, and the new Regulation setting up an Agency for the Cooperation of Energy Regulators).

As final steps, Member States will have to endorse the five legislative texts at one of the coming Council meetings and (in accordance with the co-decision procedure) the Council needs final sign off by the President of the European Parliament and the President-in-Office of the Council. The 3rd Package is expected to enter into force in September. Already last month, ERGEG concluded its public consultation on how regulators intend to implement the 3rd Package (see feature of the March 09 newsletter).

There are 2 ERGEG public consultations currently running: one on the 10-year gas network development plan; and the other on draft Guidelines of Good Practice on electricity grid connection on access. A workshop on the former takes place on 29th April and on the latter on 15th May.

Following ERGEG’s advice to Commissioner Piebalgs on the lessons from the January ‘09 Ukraine and Russia gas dispute (see PR-09-03), ERGEG was invited (for the first time) as an observer to the Gas Coordination Group (GCG). The GCG, which was set up by the European Commission in 2006, meets to exchange information and to develop concrete measures which reinforce the security of gas supply to the EU. ERGEG presented to the GCG meeting of 2 April an analysis and recommendations on the gas dispute. ERGEG emphasised that at any given time during the Russian-Ukraine gas crisis, Europe had no shortage of gas but the gas was not where it was needed. ERGEG assessed why some countries managed the crisis much better than others, and set out a series of short, medium and long term measures learned from the gas crisis. 

Just as the Council finally adopted (6 April) the “climate and energy” legislative package containing measures to fight climate change and promote renewable energy, CEER has published and seeks feedback on its first review of sustainable development in Europe (see Feature Article below).

In terms of international activities, the first regulatory roundtable of the European and African energy regulators took place on 21st April in Abidjan (see International Activities).

Energy Regulators review Europe's progress towards Sustainable Developement  

This month, Europe’s energy regulators have published a Status Review of Sustainable Development in the Energy Sector to assess the progress that Europe has made in working towards the development of a sustainable internal EU energy market. Its publication is timely with the adoption by Council (on 6th April) of the “climate and energy” legislative package (note: the European Parliament had already adopted the package in December 2008), and the goal of reaching a global climate change agreement at the Copenhagen UN climate conference in December 2009.

Europe’s “climate and energy” legislative package demonstrates the shift in European focus towards sustainable energy markets, particularly in terms of environmental and economic sustainable development. The “climate and energy package” containing measures to fight climate change and promote renewable energy. The package is designed to achieve the EU's overall environmental target of a 20% reduction in greenhouse gases and a 20% share of renewable energy in the EU's total energy consumption by 2020, including a 10% share of renewable energy in transport. The “climate and energy package" is comprised of the following 4 main legislative acts:
• The Renewable Energy Directive;
• The EU Emissions Trading Scheme ( EU ETS) Directive;
• The Carbon Capture and Storage (CCS) Directive; and
• The Greenhouse Gas (GHG) effort sharing decision.
Member States are required to transpose the Directives into national law within 18 months following their publication in the Official Journal of the EU.

Meanwhile in the CEER Status Review on Sustainable Development, the regulators have assessed the steps taken in Europe towards sustainable development, within the gas and electricity sectors, from the three perspectives that make up sustainable development namely economic, social and environmental perspectives. 

Managing the transition to a low carbon economy in the energy sector
CEER has measured the progress made to date against the challenging 2020 targets. The report finds that since 1990, total greenhouse gas (GHG) emissions have declined in the EU-27 area, however emissions from the gas and electricity sectors have remained fairly stable.

In 2006, the EU-27 sourced nearly 15% of its electricity from renewables and has a target to source 21% by 2010. It is expected that to meet the overall EU target of 20% of energy from renewables, the EU-27 will need to source 34% of electricity from renewables by 2020.

Final energy consumption in the EU-27 increased progressively between 1995 and 2006 but an even more rapid increase occurred in final electricity consumption during the same period, mainly due to greater use of electrical appliances in the service and household sectors.

Monitoring gas and electricity prices, customer choice and access to affordable energy
This section of the report focuses on economic and social issues. To monitor customer choice, the report uses electricity and gas switching rates as a proxy. The report shows that switching rates vary considerably among countries. To monitor access to affordable energy, the report examines fuel poverty in Member States where data is available. It also monitors gas and electricity prices and compares them to household income in the EU-15 area. The report reveals that electricity prices gradually decreased from 1997 and then began an upward trend from 2004 onwards. Gas prices were more volatile over the same period but also experienced an upward trend with a steep rise between 2005 and 2007. Except during the rapid increase of gas prices between 2005 and 2007, household income in the EU-15 area experienced larger percentage increases than gas and electricity prices, maintaining disposable income until 2005. Although gas prices increased from 2005 onwards, it may not have had a significant impact on disposable income as electricity represents a greater share of disposable income than gas. However, electricity prices have gradually begun an upward trend and are catching up to gas prices.

Ensuring a secure and reliable gas and electricity supply
The final section of the report examines issues relating to security and reliability of energy supply. In terms of energy dependency, in 2006 the EU-27 imported a little over 50% of the energy it consumes.

Regarding electricity security of supply, the EU-27 had a generation margin of over 20% in 2007 and imported almost 7,000 GWh of electricity in 2007. Furthermore, the contribution of wind in the EU-27’s generation mix has increased from 0.17% in 1995 to 2.9% in 2006. The amount of oil generation halved and the amount of gas fired generation has more than doubled between 1995 and 2006.

In terms of gas security of supply, the majority of gas consumed in the EU is imported from two non-EU countries, Russia and Ukraine. Finally, in 2007 European gas storage capacity was about 16% of demand.

Feedback welcome !
This is the first review of sustainable development to be undertaken by CEER. The regulators are considering future steps on the issue of sustainable development and welcome feedback on the overall scope of the report and whether it would be useful to periodically update this report as a means of monitoring the progress of Europe towards its sustainability goals. 

CEER/ERGEG Publications

Calendar of current and future public consultations

Events

Regional Initiatives Update

Region in the Spotlight - South gas region 

After the success of the Open Subscription Period, launched in the 4Qr 2008, to allocate existing and under construction interconnection capacity between France and Spain, the S-GRI has focused its efforts on the design of an Open Season (OS) for the development of new interconnection capacity between the two countries.
 
Capacity at the interconnection will be available from April 2013. Also, available capacity between the three balancing zones inside France will be sold. Spanish and French TSOs are closely collaborating to define the Open Season procedure under regulators' monitoring. During the 8th SG meeting, held on 27th April 2009, TSOs presented their proposal for an Information Memorandum, allocation rules and application request to stakeholders. A month was given to provide comments.
 
Additionally, in the same SG meeting, results of the ERGEG GGPLNG monitoring with regard to transparency in the Portuguese, Spanish and French LNG terminals were presented. The level of transparency at the South Region regarding LNG terminals was considered quite good. However, regulators gave stakeholders one month to provide comments on this issue.
 
Regarding MIBGAS, the public consultation on a proposal for harmonisation and mutual recognition of trading licenses in the Iberian gas natural market public closed this month. Regulators are assessing the comments received.

International Activities

The first Roundtable between CEER and the Energy Sectoral Committee (ESC) of the African Forum for Utility Regulation (AFUR) was held on 21 April in Abidjan.  It identifed common challenges and differences faced by European and African regulators and discussed the priorities for capacity building of ESC members.
 
CEER and AFUR shared views on the role and independence of regulators. In particular, African regulators underlined the problem of the lack of an African-wide legal framework and the fact that the creation of regulatory authorities is not mandatory in all African countries. The establishment of a stable regulatory framework and of independent regulators will be as much important as enormous investments in production and in transmission infrastructures are needed to tackle power consumption, which is growing much faster in Africa than in Europe. Developing cross-border infrastructure will be another challenge for African countries, as well as for Europe.

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