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The Agency for Cooperation of Energy Regulators (ACER) – UK Government views

The Agency for Cooperation of Energy Regulators (ACER) – UK Government views. Sue Harrison Head of European Energy Markets 13 February 2008 EPP-ED Public Hearing. Why is an Agency needed?.

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The Agency for Cooperation of Energy Regulators (ACER) – UK Government views

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  1. The Agency for Cooperation of Energy Regulators (ACER) – UK Government views Sue Harrison Head of European Energy Markets 13 February 2008 EPP-ED Public Hearing

  2. Why is an Agency needed? • Strong regulators needed at national level to oversee activities of TSOs (accepted by all Member States) • Beneficial in the energy sector to have similar approach at EU level • Agreed at the 2007 Spring Council that an independent mechanism should be established for national energy regulators to cooperate and take decisionson important cross-border issues

  3. Why should the Agency do? • To create the institutional basis for a regulatory framework reaching across national borders which is needed to establish an integrated European grid in electricity and gas within a framework agreed at political level • To give market players the regulatory certainty they need to make investment decisions • To establish a consistent set of rules to increase market integration through more efficient cross-border trading

  4. The Commission proposal does not deliver • Very few areas in which ACER is authorised to take decisions • Most of the codes are likely to remain voluntary and therefore not enforceable – no regulatory certainty • Codes are left to the ENTSOs to develop – companies with commercial objectives cannot be charged with delivering on public interest objectives • Not appropriate for the ENTSOs to develop trading codes • Role of ACER, in respect of codes, is purely advisory • Therefore Commission proposal needs to be improved

  5. Legal constraints • UK’s preferred model is constrained by ECJ rulings, notably Meroni, which are reflected in the Commission’s 2005 proposal for a Draft Interinstitutional Agreement concerning regulatory agencies • These restrict agencies’ scope for action, in particular prevents them arbitrating on conflicting public interests, making political choices or conducting complex economic assessments

  6. Adequate controls are needed • High level policy objectives involving political choices and trade-offs could be set out in the primary legal instrument, ie Electricity and Gas Regulations, to remove the scope for the Agency to exercise discretion on political issues • Or these high level objectives could be elaborated in strategic guidelines agreed by comitology • Or perhaps both?

  7. Development of codes • ENTSOs then develop the technical codes under close supervision of ACER, including consultation of all market players • ACER considers whether the codes are consistent with the high level policy objectives and/or strategic guidelines, and conducts a consultation of market players • If the ENTSOs cannot agree on the codes, ACER drafts the codes in consultation with stakeholders • ACER drafts trading codes following consultation with market players • Commission has a power of veto over decisions on codes within a set period of time • Must be a process for modifying the codes

  8. Advantages of UK model • Fulfils the mandate given by the European Council • Puts responsibility for agreeing technical and market codes with those with the requisite expertise and resources, ie ACER in close cooperation with the ENTSOs and other market players • Aims to establish binding technical and trading codes which will be enforceable at MS level, ie provides regulatory certainty • Aims to enable codes to be updated and amended as EU energy markets develop

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