Transcript International energikonference - marts 2008

How will the Third Liberalization
package influence the framework of
the regulators?
Dr. Annegret Groebel
Managing Director and
Head of International Coordination
International Energy Conference
Copenhagen – March 12th 2008
Cooperation of Energy Regulators
Setting the scene

Spring 2007 European Council mandate to establish:
“an independent mechanism for national regulators to cooperate and
take decisions on important cross-border issues”

July 2007 EP report by Mr Vidal-Quadras gave a conditional
welcome by stressing that the Commission’s role in a future EU entity
for NRA cooperation must not undermine the independence of
regulators;
foresees legally binding decisions by regulators on the basis of
consultation of TSO and other stakeholders

Powers and independence of national regulators
• Independence of market interests & political influence
• Adequate resources and powers

Commission proposals for an Agency for the Cooperation of the
Energy Regulators (ACER) for amending the Electricity/Gas
regulation measured against requirements set by Council and EP
Cooperation of Energy Regulators
Key concerns with the Commission proposal

Creates imbalance between ENTSOs and Agency

Delivers „self-regulation“ of ENTSO with voluntary codes
and rules only – not suitable to solve cross-border problems

Public interest safeguards very limited

Agency role restricted mainly to an advisory body reducing ACER to a
mere technical body following a (too) restrictive interpretation of the
MERONI case law (1958)

Lacks added value compared to ERGEG;
worse, an additional layer of bureaucracy

Fails to replicate at the EU level the model of independence and
powers required for regulators at national level
► CEER requests a remodelled Agency which acts as a
strong counterpart to ENTSO to ensure the balance between
regulators and regulatees
Cooperation of Energy Regulators
CEER Model (1)
Stage 1
Agency advises Commission on “Strategic Guidelines”
(after consultation with ENTSOs and stakeholders)
Commission introduces “Strategic Guidelines”
proposals to comitology
Stage 2
ENTSO drafts codes/rules to meet
“Strategic Guidelines” requirements
Agency disagrees
(after consultation)
Agency approves
codes/rules
(after consultation)
Stage 3
ENTSO revises
code/rule
Codes/rules (binding on TSOs
and, where necessary, market participants)
Cooperation of Energy Regulators
CEER Model (2)
 Agency decisions to be based on Strategic Guidelines which
set out political choices (e.g. on the level of security of supply
required)
 Strategic Guidelines are for agreement through comitology
following Agency advice (Stage 1)
 Avoids comitology scrutiny of highly complex, technical output
 Agency ensures that codes and rules prepared by ENTSOs are
consistent with Strategic Guidelines (Stage 2);
 Codes and rules become binding after approval by Agency
(Stage 3)
 Agency consults stakeholders at both stage 1 and 2
MERONI rulings
and their interpretation (1)
 Commission interprets MERONI case law restrictively, i.e.
excluding all decisions that involve discretion, but:
• MERONI rulings are 50 years old (ECSC!)
• numerous changes of the Treaty
• administrative situation changed considerably, strong need
for more sophisticated EC administration (effet utile)
 Conclusion:
• a wider interpretation of MERONI criteria seems possible
• ACER should have the right to adopt technical decisions and
closely related pricing decisions as these are regulatory
decisions that do not involve political discretion
MERONI rulings
and their interpretation (2)
 Technical decisions and pricing decisions are inseparable from a
regulatory point of view
 In order to be effective, codes must be mandatory
 BNetzA is therefore of the opinion that ACER should adopt
pricing decisions in binding approvals if the following conditions
are meet:
• pricing is closely related to the underlying technical issues
• criteria for ACER’s pricing decisions are precisely laid down
in legislative texts, hence very limited margin of discretion
(no law or rule making by ACER)
• right to appeal is laid down in legislative texts
• parliamentary accountability of ACER is ensured
Brunetta Report (1)
 CEER welcomes the proposed amendments to strengthen ACER
• by entrusting it with decision making powers in regulatory areas
(approval of codes (Art. 6) and in particular Art. 4 lit. h – ITC
mechanism) and
• by improving the governance structure through
- a stronger role for the Board of Regulators and EP in the
appointment of the Director
- a more efficient and transparent Admin Board with only 5
members (2 each nominated by the Commission and Council,
1 nominated by EP)
Brunetta Report (2)
 CEER has concerns regarding proposals of Mr Vidal-Quadras
• to insert a second comitology process at the end as it is of
utmost importance to provide regulatory certainty
• and it is also unclear how the necessary flexibility may be
provided
 CEER thinks that
• the Director should execute his/her tasks in accordance with
decisions adopted by the Board of Regulators
• that the Board of Regulators should be the only decision
making body of the Agency for regulatory matters
Conclusions (1)
 Integration of energy market is complex
 Balance of responsibilities and duties must be more
carefully distributed
 ACER must be able to act fast and independently on
regulatory and technical issues after consultation
with the European Network of TSOs (and other
concerned stakeholders where necessary)
 ACER must have the power to set binding standards
through approval (Stage 3 decisions) in order to be a
strong counterpart to the European Network of TSOs
Conclusions (2)
 The amendments proposed by Rap. Brunetta to
strengthen ACER and entrusting it with decision
making powers in regulatory areas are welcome and
are close to the proposed model of CEER for
mandatory codes in order to effectively overcome
the regulatory gap on cross-border issues and ensure
an efficient functioning of the market
 CEER agrees that entrusting ACER with decision
making powers in regulatory areas does not infringe
the Meroni criteria as they do not involve political
discretion
 CEER also agrees with the proposed strengthening of
the governance structure of the Agency
Thank you for your attention.
Contact:
Annegret Groebel
Federal Network Agency – Bundesnetzagentur
Tulpenfeld 4, 53113 Bonn, Germany