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Gas & Electricity Workshop

Gas & Electricity Workshop. CER Consultation CER/13/122 Access Tariffs & Financing the Gas Transportation System. 03 July 2013. Outline. About EAI Overview of the Consultation Paper The issues The proposals Principles of Better Regulation Scorecard Conclusions. About EAI.

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Gas & Electricity Workshop

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  1. Gas & Electricity Workshop CER Consultation CER/13/122 Access Tariffs & Financing the Gas Transportation System 03 July 2013

  2. Outline • About EAI • Overview of the Consultation Paper • The issues • The proposals • Principles of Better Regulation Scorecard • Conclusions

  3. About EAI • Trade Association representing the electricity industry on the island of Ireland (SEM geographic area) • Eurelectric national member for Ireland • Membership Networks Generation Supply AES BGE Bord na Móna Indaver Ireland ESB Tynagh Energia SSE Airtricity BGE Energia Electric Ireland Power NI ESB Networks NIE Vayu • A Sustainable Future Powered by Electricity

  4. Overview of CER/13/122 • A Sustainable Future Powered by Electricity • The Issues • Primary Capacity Bookings • A drop off in capacity bookings and erosion of this core revenue base • Too much flexibility offered to system users • Equity issue • Ensure that the required system is remunerated in a fair and equitable way across customer categories, with costs imposed in proportion to the service provided

  5. Overview of CER/13/122 The Issues The Real Issues Reduced Demand Recession & Weather Changes in Power Gen Relative Fuel Prices & Carbon Wind EWIC BGN Forecasts Regulatory Decisions PC3 Short Term Tariffs • Primary Capacity Bookings • Too much flexibility offered to system users • A Sustainable Future Powered by Electricity

  6. Overview of CER/13/122 The Issue The Real Issues Is this a genuine issue? Connection Policy Power Gen NDM Capacity/Commodity split Is Power Gen subsidising NDM? Yes (CER/10/089) Does CER/10/089 create this “issue”? The proposals and the “equity” issue • Equity Issue • A Sustainable Future Powered by Electricity

  7. Overview of CER/13/122 • The Proposals (to be applied at exit only) • Removal of secondary capacity transfers • Removal of the ability to buy/transfer capacity “within day” • Other Proposals • Mandatory Bookings • Removal of Mandatory Bookings for NDM • Long Term Booking Incentives

  8. Overview of CER/13/122 The Proposals The Real Issues & Impacts Transfers improve efficiency Agree: CER/10/089 (p.18) Disagree: CER/13/122 (p.9) All within category (LDM) secondary capacity transfers require a primary booking Redundant capacity Cost & Revenue implications Flexibility is increasingly important to Power Gen Demand for flexible products recognised by CER • Removal of Secondary Capacity Transfers • A Sustainable Future Powered by Electricity

  9. Overview of CER/13/122 The Proposals The Real Issues & Impacts Power Gen & Flexibility Central dispatch Double payment? Demand destruction? EU Compliance Regulation (EC) 715/2009 Art. 13, 14, 16, 22 “Equity” issue Increased cost for reduced service? • Removal of ability to buy/transfer capacity “within day” • A Sustainable Future Powered by Electricity

  10. Better Regulation • Better Regulation White Paper (2004) • Dept of An Taoiseach Consultation (2013) • The Principles • Necessity • Effectiveness • Proportionality • Transparency • Accountability • Consistency

  11. Better Regulation Scorecard F F • Necessity F • The specific proposals are not necessary • Some change may be required • All options should be considered after the issues are properly defined • Effectiveness • The proposals are not properly targeted as the issues are poorly or inappropriately defined • The proposals will have consequences contrary to their intended impact

  12. Better Regulation Scorecard NG F • Proportionality • A comprehensive assessment of the drivers of change has not been undertaken • No assessment of alternatives has been undertaken • The expected costs to outweigh the benefits as the proposals have a disproportionate impact on flexibility • Transparency • The consultation paper has no analysis, just statements • The paper has no supporting legal opinion, just statements • The timeline for consultation is inappropriately short

  13. Better Regulation Scorecard F NG • Accountability • CER are responsible for regulating shippers and networks • Many of the arguments forwarded in support of CER’s approach are taken from BGN correspondence • There is no effective appeals process • Consistency • The consultation does not adhere to best practice • Proposals are inconsistent with; • Wider gas and energy market objectives • The intended outcomes stated by the CER

  14. Conclusions • A poor paper on top of a poor process (PC3) • Proposals are based on conjecture and prioritise stability of network revenue • The appropriate time to address tariffs was PC3 • If this is a systemic long term issue, it requires a comprehensive review over an appropriate period • Flexibility must be accommodated, not ignored • The concept of economic efficiency is misunderstood • The “equity” issue is misconceived and is an anomaly in the context of CER/10/089 • Next Steps…

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