March 2010


European Energy Regulators’ News

Issue: March 2010

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- Joined-up thinking on smart grids in Europe

- See calendar of next workshops

EU Energy Commissioner, Mr. Oettinger who came in 2nd place (after the EU Environment Commissioner) in the E-Bike race, Brussels

- Joined-up thinking on smart grids in Europe

Generation Adequacy
Draft benchmarking report on medium and long-term electricity transmission capacity allocation rules

Region in the Spotlight
-   2010 Quarter 1 update of all regions


The European Commission’ clear message in publishing its 2009 Benchmarking Report is that correct implementation of EU energy laws, and infrastructure investments are top priorities. The Commission concluded that Member States still lack behind in the implementation of the internal energy market rules, a finding shared by ERGEG.  Input to the European Commission's report came from the 2009 national reports by regulators (published in January) and the Commission’s own investigations.

At the Energy Council meeting of 12 March, Member State representatives reached political agreement on the proposed Regulation concerning investment projects in energy infrastructure, adopted conclusions on the Strategic Energy Technology Plan (SET-Plan) and heard EU Energy Commissioner Oettinger’s presentation on the Commission’s communication “Europe 2020”.  Europe 2020 identifies 3 drivers of growth (smart growth, sustainable growth and inclusive growth) designed to prepare the EU economy for the next decade.

On gas issues, on 24 March representatives from EU Member States met in Brussels (2nd meeting of the Gas Committee) to discuss the proposed minimum gas transparency guidelines, which will amend the current guidelines attached to the Gas Regulation. However, no final agreement was reached at the meeting. The proposal is based on an initiative by all stakeholders of the 15th Madrid Forum, and strongly supported by ERGEG, for making minimum transparency requirements binding in an effort to improve information flows. The same day the Cross-Border Electricity Committee (made up of representatives of Member States) agreed on Guidelines for an Inter-TSO Compensation mechanism in electricity and on Guidelines for a common regulatory approach to transmission charging. According to the ITC Guidelines adopted, ACER will be charged with making a proposal, at the latest two years after it has assumed its functions, on the Union-wide annual cross border infrastructure compensation sum. The Commission shall then determine the definitive compensation sum which until that time is capped at 100m Euro per year.

The European Parliament’s ITRE committee adopted on 18 March its 1st reading report on the draft security of gas supply regulation. The plenary vote by the European Parliament is currently scheduled for 19 May 2010, but may be further delayed.  Trilogue meetings are planned so as to reach a negotiated first reading agrrment between Council and European Parliament before the end of the Spanish Presidency. 

On 17th March, ERGEG hosted a workshop on smart grids (see Feature article below on what smart grids mean for consumers and network companies). This month, the regulators have set out their views on how generation adequacy needs to be addressed throughout the EU electricity market. Interested parties can submit their views by 27 April 2010. This newsletter contains a quarterly update of each of the 7 electricity and 3 gas regions of the Regional Initiatives.  Regulators are also consulting (deadline is 14 May) on their draft report on medium and long-term electricity transmission capacity allocation.

Joined-up thinking on smart grids in Europe

Europe’s regulators have taken up the mantle of pioneering “smart grids”. Interest is high with more than 50 responses to the recent ERGEG public consultation and a full house at the ERGEG smart grids workshop on 17th March.

What is a smart grid?
The term “Smart Grids” is about planning, building, expanding, operating and maintaining the electricity networks in such a way, so as to support the achievement of the 20/20/20 targets, secure and sustainable electricity supply, in the competitive market environment. Smart grids will not look significantly different to today’s conventional grids transporting and distributing power over copper and iron.

Joined-up thinking on smart grids in Europe
Although there is broad agreement in Europe on the definition of a smart grid (see there is still need for coordination of the different market actors. ERGEG’s recent public consultation (and workshop) on Smart Grids sought views on the drivers, the regulatory challenges and priorities for electricity grids to become smarter, more efficient and customer-oriented. In late 2009 the European Commission created a Task Force on Smart Grids which has 20-months to establish a proposal for a clear framework. The Task Force has 3 expert groups, of which ERGEG chairs the one on roles and responsibilities.

What will smart grids mean for consumers and retail markets?
Smart grids will help consumers better participate in the market not only by using their energy more efficiently but will lead to more “generation-oriented consumers” as consumers themselves become producers (e.g. CHP or plug-in electricity vehicles) selling back their excess electricity to the grids.  This will cause a paradigm shift in retail markets providing new opportunities for consumers and retailers alike.

What is expected of network companies?
The shift in character of network users and the integration of the new services present a number of new challenges for electricity network operators. The new challenges include amongst others network capacity planning to ensure economic and efficient network planning and methodologies that allow network capacity to be shared effectively, particularly for intermittent generation. Furthermore, they have to providing new connections considering the increasingly diverse range of generating technologies will need to be connected in efficient ways without endangering the quality and reliability of other network users. Appropriate connection requirements will need to be developed for generators of all sizes and technologies.

Smart grids help implement European energy policy
The term „Smart Grids“ stands for the way how the future electricity networks are operated, planned, built and maintained, so as to support achieving the 20/20/20 targets which cover sustainability and security of supply objectives of European energy policy.

Energy Regulator’s role in smart grids
Regulators act as key facilitators of smart grids, encouraging an adequate level and scope of smarter solutions to meet network users’ needs. See the Smart Grids FactSheet for a simple explanation of what smart grids are (and are not); how they relate to smart metering; and how (when combined with smart regulation) they can help meet the EU’s climate change objectives (including examples).


Events (see Events section of website for the new calendar of next workshops) :
• Workshop on  Pilot Framework Guideline on Electricity Grid Connection, Brussels, 16 April 2010

Calendar of current and future public consultations

Area Issue Consultation
publication date
Gas Guidelines of Good Practice on CAM & CMP to storage facilities April - 
May 2010
  Input to the Framework Guideline on gas balancing rules TBD
  Framework guideline on gas transmission tariffs TBD
Electricity Position paper on smart grids December 2009 - 
March 2010
  Call for evidence on incentives schemes to promote cross-border trade in electricity January -
March 2010
  Call for evidence on generation adequacy March -
April 2010
  Draft benchmarking report on medium and long-term electricity transmission capacity allocation rules March -
May 2010
  Framework guideline on electricity capacity allocation and congestion management July -
September 2010
  Framework guideline on electricity grid connection TBD
  Framework guideline on operational security / system operation TBD
  ERGEG advice on comitology guideline on electricity transparency TBD
Customer Draft GGP on Indicators for retail market monitoring April -
May 2010
  Draft GGP on regulatory aspects on smart metering gas and electricity June - July 2010
Cross Sectoral CEER response on interdependencies with other markets TBD

The standard period for ERGEG public consultation is 8 weeks. See the public consultations section of the website.   


See all dates of Regional Initiatives meetings (RCC, IG, SG) on the ERGEG online Calendar.  

Regional Initiatives Update


Region in the Spotlight - quarterly update on all regions

In the Baltic electricity region a public consultation took place between December 2009 and February 2010 on the draft transparency report for the region.

In the Central-East electricity region the deadline (10th March) for launching the flow-based capacity calculation method was delayed because TSOs experienced technical problems with capacity calculation. They are currently identifying the underlying reasons. Regarding balancing it is hoped to complete the work and start the common balancing market between Austria and Germany in the coming months. The region also plans to complete its transparency roadmap in 2010.

In the Central-South electricity region the first explicit auctions for long term allocation for 2010 are still held independently for each border by the relevant TSOs. Full harmonisation on the Italy-France border is expected from April 2010. TSO negotiations are ongoing about signing a memorandum of understanding which would allow CASC-CWE to become the common auction operator for the region. The pilot project for implementing a market coupling for the Italy-Slovenia border is progressing. The testing phase performed by power exchanges has provided good results. Implementation of the coupling for day-ahead capacity allocation on this border is planned for the third quarter of 2010.

In the South-West electricity region a draft Action Plan 2010-2012 is being finalised. It includes day-ahead market coupling between MIBEL, Central-West and Nordic electricity regions as proposed by the power exchanges. The SW electricity region published a regional monitoring report on the use and management of interconnections.

In the Central West region, a new version of the auction rules for long term allocation was proposed by the TSOs at the beginning of February 2010. There is also ongoing discussion on the implementation of day-ahead market coupling.

The France-UK-Ireland electricity region identified regional coordination of longer-term explicit auctions on IFA, Moyle, Britned and East-West Interconnector as a priority. Another priority for 2010-2012 will be the market coupling (day-ahead allocation) between the FUI and the Central-West electricity regions. In terms of balancing, the aim is to establish a final solution (for implementation in November) increasing the number of prices exchanged per day (currently six) between UK-France.

In the North-West gas region work continued on improving the regional investment climate. In 2009, a Virtual Test Case on investment had been initiated with all relevant parties to test the economic modeling and process of a regional investment, by means of a walk-through simulation of construction of a regional gas pipeline from Germany – via the Netherlands and Belgium – to France of a size up to 20 bcm. This test case was finalized by publication of its policy advice in February 2010. A Manual which gives a description of the procedures, followed by each NRA within the region when assessing proposals for new (cross-border) infrastructure investment, has been finalised. The work on this project continues in 2010 by implementing the lessons learnt. The first investment workshop to discuss progress is planned for 4 June 2010.

The key investment projects in the South gas region are two coordinated Open Seasons to assess market needs for new interconnection capacity and allocate this between France and Spain (including also capacity inside France). One considered the increase of interconnection capacity at the existing interconnectors, Larrau and Biriatou, from 2013. The other assessed the market’s interest in building a new interconnection pipeline, MIDCAT-Perthus, which would be available in 2015. The process was finalised at the beginning of February 2010 with the French TSOs’ positive decision of investing in the infrastructures associated to 2013 capacities. As a result of this process, capacity will be increased up to 5.5 bcm/year at Larrau interconnection in March 2013. The region's approved regulatory work plan also includes a study on the level of transparency to monitor compliance with the new transparency provisions in the Regulation (EC) No 715/2009.

In the South-South East gas region, after the finalisation of the Operational Balancing Agreements at the Barmgarten Interconnection Point and the assignment of the central matching activities to the Central European Gas Hub (CEGH), the Spot Market in cooperation with the Vienna Stock Exchange and the European Commodity Clearing was launched successfully in December 2009. CEGH is also planning to introduce derivatives trade in Q3 2010.

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, news from the Regional Initiatives, and regulation and policy developments at a national level.

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