UK: ERGEG Consults On Third Package Implementation

Last Updated: 24 October 2008
Article by Robert Lane and Nicholas Molho

Following the recent EU Council meeting on the third package proposals, the European Regulators Group for Electricity and Gas (ERGEG) published a consultation paper on 21 October to seek stakeholders' views on the best way forward to prepare the EU's gas and electricity markets for the implementation of these proposals.

The third package proposals are expected to receive final EU legislative approval by the end of 2008 and the consultation seeks views as to what steps would be helpful to take in the 18 month interim period to help prepare the gas and electricity markets for the implementation of the third package measures. This consultation paper will be of interest to gas and electricity transmission system operators and all energy companies involved in the EU's gas and electricity markets.

The ERGEG consultation seeks stakeholders' views on 4 areas.

Role of the new European regulatory Agency

The third package proposals envisage the creation of a new European regulatory agency (referred hereafter as the "Agency") to monitor the EU's gas and electricity markets, in particular with respect to cross-border issues. The consultation seeks views on proposals which the Agency could follow to ensure it carries out is work effectively. In particular, ERGEG seeks views on whether the Agency should adopt consultation mechanisms similar to those currently used by ERGEG and whether 'ad hoc panels' of interested expert stakeholders could assist the Agency in the development of its regulatory policies.

Cross – Border Gas and Electricity Network Codes

The third package envisages the development of cross-border network codes for both the gas and electricity market, which are to be prepared by the independent European Network Transmission System Operator organisations (ENTSOs), but the objectives of which are to be defined by the Agency. The European Commission has identified 11 areas for both gas and electricity that will need to be dealt with in these codes. The consultation seeks stakeholders' views on ERGEG's proposals to seek to regroup these areas in various codes and to establish the following order of priority for the development of such codes:

Electricity

  • Priority 1: security and reliability rules; interoperability rules and operational procedures in emergency
  • Priority 2: grid connection and access rules; capacity allocation and congestion management rules and transparency rules
  • Priority 3: balancing rules and data exchange and settlement rules
  • Priority 4: harmonised transportation tariff structure rules and energy efficiency rules regarding electricity networks

Gas

  • Priority 1: capacity allocation and congestion management rules, transparency rules and balancing rules
  • Priority 2: harmonised transmission tariff structure rules and interoperability rules
  • Priority 3: security and reliability rules, grid connection and access rules, data exchange and settlement rules, technical and operational rules for the provisions of trading of network access services and system balancing
  • Priority 4: operational procedures in an emergency and energy efficiency regarding gas networks

Co-ordination between ENTSOs and EU regulators

The third package proposals will give rise to the creation of two new independent ENTSOs for the gas and electricity markets, for the purpose of co-ordinating the activities of TSOs to the extent necessary for fulfilling the third package objectives.

For these arrangements to work efficiently, ERGEG calls for the need to put in place clear published documents that will describe (i) the way the interactions between the new Agency and the ENTSOs will work as well as (ii) how the relationship between European gas and electricity regulators should be structured. The consultation calls for stakeholders' views as to how these interactions should work.

Further regional co-operation

To reflect the third package requirement for further co-ordination of network planning and co-ordinated decision making in respect of cross-border infrastructure investments, ERGEG is also consulting on proposed processes to help enhance co-ordination at regional and EU level when dealing with such projects.

Next Steps

Stakeholders have until 31 December 2008 to send their views on the consultation proposals.

To access the ERGEG consultation paper, please click here.

To read our previous law-now on the Council's vote on the third package proposals, please click here.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 23/10/2008.

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