The Energy
Community Secretariat release on 15 July 2015 the Draft for Consultation on the
Policy Guidelines on the Promotion of Organised Electricity Markets in the
Contracting Parties developed with the support of an ad-hoc working group
comprising academia and industry professionals listed at the end of the document.
In its introduction the report state that Market integration is a central target
of the Energy Community, comprising both the Member States of the EU and the
Contracting Parties of the Energy Community.
In regard,
the CACM Regulation’s single market coupling concept is clearly meant as a
pan-European project. It can hence be assumed the central market integration
functionality by establishing a single mechanism for the most important
timeframes. It moreover facilitates sufficiently compatible market designs. In
the following, the solutions and requirements foreseen by the CACM Regulation
are treated as a prerequisite.
By the time
of drafting the present Policy Guidelines, European day-ahead market coupling
is reality and has to be regarded as focal point for the electricity market
integration in the Energy Community. Further developments regarding the
integration of intraday markets will additionally be facilitated with the
creation of organised day-ahead markets, as processes closer to real-time will
have to be established and operated.
In regard of
the Prerequisites, one of the most important for the creation of a truly
integrated Energy Community electricity market, comprising the EU and the
Energy Community Contracting Parties is aligning the legal framework. This
entails the timely adoption and implementation of all legal acts comprising the
EU electricity acquis, including the 3rd Energy Package, as well as
all related Guidelines and Network Codes.
For the
latter, it is of utmost importance that the implementation gap between the EU
Member States and the Contracting Parties does not widen due to legal
uncertainty as a consequence of a staggered incorporation into the Energy
Community acquis. Applying this to the requirements for spot markets, it means
that the central re-regulatory measure, the CACM Regulation, shall be adopted for
the Energy Community in its entirety, and at best with the smallest possible
time delay.
The positive
evolution in the EU towards coupled day-ahead markets, implementing a part of
the target model, has happened without any legally binding Code or Regulation
in place. For the Energy Community Contracting Parties this example is not
applicable, as the EU parties implementing the coupling projects had awareness
of the coming targets and were in expectation of binding regulations.
The Code
(now CACM Regulation) provided valuable answers to most of the questions that
surround the establishment of organised and coupled markets. The cost sharing
keys proposed by the CACM Regulation, for example, help in implementation
projects that have a cooperative nature. For that, the adoption and application
of the CACM Regulation’s provisions into the Energy Community acquis is at the
heart of these recommendations.
The
observation that the difference in the legal framework creates obstacles for
the completion of the internal market by implementing its Target Model is
provided by the Draft CACM Regulation itself, by stipulating that for example
the countries forming part of the 8th region are only to develop a
flow-based methodology once the Contracting Parties have joined the single
day-ahead coupling. The general notion of all Network Codes is that more
cooperation between the operators of the interconnected grid is necessary.
Differences in the legal and regulatory framework should be kept at a minimum
for a minimal time.
Besides the
creation of new binding obligations to overcome the integration deadlock in the
8th region, especially in the Contracting Parties, the national
legal and regulatory obstacles that impede market entry, free price formation
and competition will need to be removed:
The market
participation requirements should not foresee any form of preferential
treatment of incumbent or national market participants over others. Identifying
and abandoning these barriers to market integration will be one of the main
challenges in the next step of moving closer to the single day-ahead coupling.
Another
legal barrier to the functioning of coupled organised markets are
non-harmonised tax systems or double-taxation, which unduly discriminate
between market participants, or diminish their liquidity through long-lasting
refunding procedures. In countries where discriminatory fees, tariffs or other
direct or indirect costs on the cross-border exchange of electricity hinder
fair competition, these will obviously need to be abandoned. Such
discriminating measures directly impacting the traded commodity are obviously
in contradiction with fair competition.
Other
discriminatory provisions refer to the operation of an organised market: with
regard to below recommendation to seek cooperation with existing and well
established EU partners for the operation of organised markets in the
Contracting Parties, be this power exchanges or clearing houses, national laws
shall not prevent the outsourcing of any of the functionalities, especially
with regard to clearing and settlement. Also, any form of regulatory
intervention in market based price setting on production, wholesale and
balancing level needs to be abolished.
The best
approach in identifying the legal and regulatory barriers to the establishment
of organised market structures in the Contracting Parities that will form part
of the single day-ahead coupling, is that the legislative and regulatory
authorities within the Contracting Parties assess potential conflicts between
the CACM’s provisions and existing legal obligations before the transposition
into national law in order to avoid conflicting rules.
In regard
the ECS Draft for Consultation conclude that “Such endeavour can be realised
already at the time of publication of these Guidelines, as a consolidated draft
version outlining the CACM Regulation’s main principles is already available.
Such conflicting elements may be unique in each Contracting Party, as the CACM
Regulation was not drafted in a spirit to provide a solution to all potential
elements hampering market functioning”.