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Harmonised rules and network codes: The division of competences between European and national regulation

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Benedikt Ennser (E-Control) presents at the Vienna Forum on European Energy Law, 2013

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Harmonised rules and network codes: The division of competences between European and national regulation

  1. 1. Harmonized rules and network codes – The division of competences between European and national regulation Benedikt Ennser, E-Control
  2. 2. 3 Overview • Rules  Network code development  Legal issues • Institutions  ACER & national regulatory authorities  Infrastructure and regulatory cooperation • Conclusions
  3. 3. 4 Rules: Network codes • Development  ACER – ENTSOs – Commission • Implementation  Market participants, national regulatory authorities (Member States?) • Monitoring  ACER, NRAs  ENTSOs (TSOs as amici curiae?) • Enforcement  NRAs, Member States
  4. 4. 5 Network code development: Institutions & procedure National Regulatory Authorities Member States Framework guidelines Network code Commission Regulation + TSOs
  5. 5. 6 Network code development: Timeline EC defines priorities for network codes EC requests ACER to submit framework guidelines EC requests ENTSO to submit network code ENTSO submits network code to ACER ACER submits network code to EC if satisfied, recommending adoption 6 months ACER prepares framework guidelines ENTSO prepares network codes 12 months 3 months ACER provides opinion COMITOLOGY  The legacy of the “Meroni” doctrine
  6. 6. 7 Network code development: State of play 6 months ACER prepares framework guidelines ENTSO prepares network codes 12 months 3 months ACER provides opinion COMITOLOGY Electricity Gas Tariffs Interoperability CAM CACM*, FCA RfG*, BAL OPS, LFCR * draft NCs to be amended OS DCC Balancing*
  7. 7. 8 What does a network code look like? • Structure – example of Gas CAM:  Subject matter – scope – definitions  Cooperation between TSOs  Capacity allocation: methods, products  Bundling  Interruptible capacity  Tariffs and booking platforms  Adaption of terms and conditions, entry into force • Are NCs part of Regulations 714/2009, 715/2009? “This Regulation has been adopted on the basis of Regulation (EC) No 715/2009 which it supplements and of which it forms an integral part. References to Regulation (EC) No 715/2009 in other legal acts shall be understood as also referring to this Regulation.” (Recital 6 draft CAM NC)
  8. 8. 9 Network codes: Legal issues (I) • Scope of a network code  What is non-essential?  Policy impact vs fundamental rights & freedoms • Impact on existing contracts  What is proportionate?  Adaptation requirements • Derogations & transitional periods  How much and how long?  Harmonisation vs special circumstances
  9. 9. 10 Network codes: Legal issues (II) • Handbooks & committees  A matter of sub-sub-sub-delegation?  Sufficient level of detail vs changing circumstances • Amendment of draft network codes  How to break a procedural deadlock?  “Qualified recommendations” by ACER • NRA competences  How much regulatory oversight?  Notification – approval – setting of standards/methodologies
  10. 10. 11 Network codes: Legal issues (III) • European vs national network codes  “The network codes shall be developed for cross-border network issues and market integration issues and shall be without prejudice to the Member States’ right to establish national network codes which do not affect cross- border trade.” (Article 8 (7) Gas & Electricity Regulation) • Implementation of NCs: Regulatory approvals  Example CAM: “Where two transmission system operators wish to shorten the lead time for interruptions, any related agreement entered into between the transmission system operators shall be subject to competent national regulatory authority approval.” (Article 22 (2) draft CAM NC)  Legal form? Procedure? Conditions/time limit? Criteria for assessment?
  11. 11. 12 Institutions: ACER & NRAs • NRA referral to ACER  “For cross-border infrastructure, the Agency shall decide upon those regulatory issues that fall within the competence of national regulatory authorities […] only: a) where the competent national regulatory authorities have not been able to reach an agreement within a period of six months from when the case was referred to the last of those regulatory authorities; or b) upon a joint request from the competent national regulatory authorities.” (Article 8 ACER Regulation) • Review of NRAs’ decisions  “The Agency shall provide an opinion, based on matters of fact, at the request of a regulatory authority or of the Commission, on whether a decision taken by a regulatory authority complies with the Guidelines referred to in [the 3rd package] or with other relevant provisions of those Directives or Regulations.” (Article 7 ACER Regulation)
  12. 12. 13 Infrastructure & regulatory cooperation (I) National Network Development Plans 10-Year Network Development Plan Projects of Common Interest Regional Investment Plans Approval by national regulatory authorities ACER, EC (MS) Opinion Selection: Regional groups European Commission ENTSOG ENTSO-E TSOs Electricity Gas GasElectricity Electricity Oil CO2 Gas
  13. 13. 14 Infrastructure & regulatory cooperation (II) • Selection of Projects of Common Interest  “For proposed projects falling under the categories set out in points 1 and 2 of Annex II.1 and 2, national regulatory authorities, and if necessary the Agency, shall, where possible in the context of regional cooperation (Article 6 of Directive 2009/72/EC, Article 7 of Directive 2009/73/EC), check the consistent application of the criteria/ cost-benefit analysis methodology and evaluate their cross-border relevance.” (Annex III (2) of the draft Infrastructure Regulation) • Cross-border allocation of costs  “Within six months of the date on which the last investment request was received by the national regulatory authorities concerned, the national regulatory authorities shall, after consulting of the project promoter(s) concerned, take coordinated decisions on the allocation of investment costs to be borne by each system operator for the project, as well as their inclusion in tariffs.” (Article 13 (5) of the draft Infrastructure Regulation)
  14. 14. 15 Conclusions • Network codes will help operationalize the legal framework by harmonizing market rules, but the process of code development is lengthy, sometimes troublesome and provides a number of legal challenges. • Experience so far shows attempts to “pass on” unresolved issues to Comitology, to handbooks, to NRAs, to future amendments. • ACER institutionalizes regulatory cooperation on cross- border issues; nonetheless, NRAs will also need to reinforce bilateral/multilateral coordination. • The EU Infrastructure Regulation enables cross-border cost allocation; yet it remains to be seen to what extent TSOs and NRAs are willing to shift infrastructure costs.
  15. 15. 16 Benedikt Ennser E-Control Legal Department  +43 1 24724 421  benedikt.ennser@e-control.at  www.e-control.at Contact details

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