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TSOs should push on with electricity and natural gas network codes - ACER

26 Jan 2012 14:48:59 | edem esgm

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European transmission system operators (TSOs) should begin to implement new network codes even before the EU states have given the codes their final approval, according to a key regulator. If so, the first new rules probably on access to energy infrastructure could start affecting traders late next year.

The network codes should be rolled out in parallel with so-called comitology negotiations between EU state representatives, the director of the Agency for the Cooperation of European Energy regulators (ACER) said at the Eurelectric Conference in Brussels, Belgium, last week.

During the comitology negotiations, officials from national energy ministries will meet in a committee led by the European Commission to sign off on the network codes drawn up by the European Network of Transmission System Operators for Gas and Electricity (ENTSO-G and ENTSO-E). These negotiations will happen behind closed doors and could lead to changes to ENTSO-G's codes.

But ACER director Alberto Pototschnig told ICIS Heren in an interview that national TSOs should still start implementing the codes straight away.

"It might happen that some rules within the network codes are changed during the comitology process. But we still think that we should start implementing the codes, even if that means that we might need to change something afterwards," Pototschnig said.

The first rules could be implemented in late 2013. So far, regulators have given priority to capacity allocation and congestion management at cables and pipelines, as well as integrating mushrooming renewable installations into the grid and changing natural gas balancing - indicating any 2013 developments could relate to these areas.

The late-2013 implementation leaves little leeway to achieve a EU-wide internal market by 2014, as decided by EU states in February last year.

Network codes status

The electricity network code on capacity allocation and congestion management (CACM) will be ready by September 2012 (see EDEM 6 December 2011). An ENTSO-E representative confirmed during the Eurelectric conference that a consultation will be launched in late spring.

ENTSO-E should also submit a network code on electricity grid connection to ACER by the end of June this year (see EDEM 25 January 2012), while the set of rules for a EU-wide balancing system is proving more difficult to achieve, Pototschnig said.

Previously, the TSOs association said that a final draft of the balancing network code is scheduled for the second quarter of 2013 but work will start this year (see EDEM 11 October 2011).

Long-term capacity allocation

When questioned about long-term capacity allocation procedure, Pototschnig said that financial transmission rights (FTRs) are ACER's preferred option, as opposed to physical transmission rights (PTRs), as these help to avoid all the physical problems related to transmission rights. "In this way, transmission rights would become a financial product and will not have to deal with any use-it-or-sell-it mechanism or anything like that."

However, he stressed that ACER is also advocating an exemption of FTRs from the markets in financial instruments directive (MiFID) regulation. "I don't think there's any risk of speculation on FTRs, so they could be exempted from MiFID. If not, energy traders would be obliged to turn into financial mediators only for that single product. This does not sound right," Pototschnig added.

During his presentation at the conference, ACER's director said that ENTSO-E should release an analysis on the impact on the market of FTRs as a long-term capacity allocation mechanism later this year.

A spokeswoman for the internal market Directorate-general said that the inclusion of FTRs in MiFID would depend on "the detailed design of the products".

"The Commission has been assessing the merits of various approaches to maximising the commercial availability of long-term cross border transmission capacity, including requiring transmission system operators to issue long-term financial transmission rights Identifying the appropriate design is part of the assessment," she added.

REMIT

Pototschnig also spoke about the regulation on energy markets integrity and transparency (REMIT), acknowledging the progress that companies across Europe have made, and recognising the industry's call for a single transparency platform (see EDEM 17 January 2012).

If necessary, ACER would consider creating a platform to publish all the information provided by the single parties. "It will be a last resort. We hope that the market itself will come up with something like that. But if not, we might do it."

Next steps

Debate on MiFID started late last year, and the next discussion is scheduled for 13 February.

The directive's rapporteur at the European Parliament, Markus Ferber, said that he is likely to table his report on the document in early spring, but expected that talks to finalise the directive would be lengthy. MM

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