Managing Regulatory Forces - The Path to a Pan-European Power Regulator

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • There is currently no EU-wide energy regulator
    • The EU does not have administrative agencies to impose sanctions in most policy areas
    • EU member states have been mandated to create national energy regulators
  • European national regulators are recommending the creation of an EU-wide regulator
    • Harmonized regulation of transmission activities across the EU is urgently needed
    • National regulators voluntarily collaborate on detailed rules to implement the broad principles of EU law
    • Cross-border power exchanges and the drive for an integrated EU-wide market create pressure for supra-national regulation
    • The EC has tasked the ERGEG with creating guidelines to facilitate an efficient and fair EU-wide transmission system
    • The ERGEG has called for a significant strengthening of national regulators' independence, authority and resources
    • The ERGEG has called for permanent regulatory arrangements at an EU level
  • Current transmission interconnection mechanisms are hindering energy market integration
    • Disparities in trade requirements illustrate the importance of interconnection to achieve an efficient European power system
    • The existing system of cross-border capacity allocation is hindering EU-wide market integration
  • Extensive market coupling, while improving capacity allocation regionally, creates pressure for EU-level regulation
    • Regional exchanges and market coupling efforts are helping to solve some of Europe' s capacity allocation problems
    • The leading example of market coupling is the Nord Pool
    • Danish-German market coupling will come online at the end of 2007
    • Dutch-Belgian-French market coupling is set to expand to include other markets
    • Through market coupling, participants rely on one country' s domestic agencies in the absence of an EU-wide regulator
  • An EU-wide regulatory agency may be established in next year' s Third Electricity Directive
    • An EU-wide regulatory agency may be established in next year' s Third Electricity Directive
• APPENDIX
  • Definitions
  • Further Reading
  • Datamonitor Consultancy
  • Ask the Analyst
  • Disclaimer
  • List of Figures
    • Figure 1: 2006 Net power trade requirements across Europe
    • Figure 2: Relationships between interconnection volume and capacity prices are largely random