Energy Package: EURELECTRIC calls for greater market integration

14 December 2007

As the EU legislators intensify their debate on the European Commission proposals for a third package of energy liberalisation measures, EURELECTRIC is calling on them to draw up a grid model that is truly conducive to both effective unbundling and market integration, and has listed, in a policy paper published today, a number of priority measures capable of fostering broader and more liquid electricity markets. The paper also stresses the need for a balanced and democratic process with genuine involvement of market parties via the creation of a specific stakeholders' group and further argues that wholesale market development should be accompanied by parallel moves towards properly-functioning retail markets with improved interoperability. EURELECTRIC urges the Council of Ministers and European Parliament to revise the Commission's proposals along these lines.

EURELECTRIC believes that non-discriminatory third-party access to the grid is a fundamental principle of any properly functioning market and that, accordingly, transmission system operators (TSOs) must be effectively unbundled and able to act independently of any other interests. That being so, the models for a TSO and the Independent System Operator (ISO) described in the Commission proposals should be placed on an equal footing - ie subject to equivalent requirements as regards their task as system operator and in ensuring non-discriminatory grid access - and approved after a similar process.

However, grid access should not be seen as the only objective and should be closely connected to the original aim of the proposed Directive, namely establishing an integrated European market in electricity and gas.

The third package as formulated by the Commission puts, on the whole, too much emphasis on national issues and more must be done in order to deliver on European market integration. EURELECTRIC recognises that TSOs can make a significant contribution to facilitating market development, but questions whether the cooperation among TSOs as proposed by the Commission will be sufficient to rapidly bring about larger and more liquid electricity markets. We are therefore calling for a more robust framework for regional TSO cooperation that will lead to regional system operation and regional planning.

EURELECTRIC has set out a list of necessary priorities, including integrated day-ahead and intra-day markets with harmonised gate closures, combined with market coupling congestion mechanisms (where market design permits) which can play a positive role in building regional markets. These priorities should also be underpinned by a more balanced process in which the proposed Agency for the Cooperation of Energy Regulators should play a stronger role in the drafting and approval of market-related codes. EURELECTRIC takes the view that the establishment of a permanent Market Stakeholders Group similar to that enshrined in the proposed Telecoms package is an essential guarantee to ensure that market rules are defined according to the real needs of the market.

EURELECTRIC welcomes the idea of a Retail Forum as a platform for discussion on ways and means to develop properly functioning retail markets for both electricity and gas. The development of these markets requires a broader approach including the setting up of a "change-of-supplier process" as a reference model.

EURELECTRIC also notes that the package fails to clarify end-user regulated prices and reiterates its call for Member States to bring these regulated prices in line with the current Electricity Directive.

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