ACER - Options for enhancing regulatory oversight of the IEM

As part of a new market design initiative (MDI) for the Energy Union,
the Commission wants to improve the institutional framework that governs how the Internal Energy Market (IEM) functions. Not insignificantly, this includes enhanced regionalisation of energy markets and improvement of coordination between various market actors (e.g. distribution system operators, or ‘DSOs’, transmission system operators, or ‘TSOs’, and national regulatory authorities, or ‘NRAs’). The Commission aims to propose a legislative package by the end of 2016 that will include a number of measures to achieve these aims.

For consumers to benefit from and trust in a complete and fully functional EU internal energy market (IEM), they need to be confident that the market, as well as ‘independent’ regulatory oversight, can operate with their best interests in mind.

Further market regionalisation and institutionalisation of market actors in the development of market rules (e.g. DSOs) will amplify the need for strong regulatory oversight, transparency and accountability. At the same time, regulatory oversight must ensure that market rules do not prevent increased competition from new market actors (including active consumers, or ‘prosumers’).

In particular, the Agency for Cooperation of Energy Regulators (ACER) will need to be further empowered (and resourced) to coordinate with NRAs to ensure that the MDI benefits consumers and provides a level playing field for new and small actors. Specifically, the briefing assesses legal options for enhancing ACER’s remit to:
1. Oversee existing (e.g. the European Network of Transmission System Operators for Electricity,
or ‘ENTSO-E’) and new EU-level bodies (e.g. a potential EU-DSO body);
2. Oversee cross-border activity, including regional cooperation on grid operation and infrastructure planning (e.g. TSOs and Regional Security Centres, or ‘RSCs’;
3. Monitor wholesale markets under Regulation 1227/2011 (REMIT);
4. Coordinate and oversee the development of adequacy assessments and/or adoption of capacity remuneration mechanisms (CRMs) by Member States; and
5. Assist the Commission monitor and enforce independence requirements for NRAs.

The aim of the briefing is to:
1. Highlight the need for enhanced oversight and decision-making authority by ACER;
2. Assess to what extent EU law allows for expansion of ACER’s mandate; and
3. Propose legal options for improving ACER’s regulatory oversight role.

Based on our assessment, we propose several key recommendations for enhancing ACER’s remit, including:
1. Tasks currently provided ENTSO-E that present conflicts of interest should be transferred to ACER, and ACER’s oversight of ENTSO-E should be strengthened.
2. ACER should have strong powers to oversee any potential new EU-DSO body.
3. As market coupling increases, ACER should be empowered to exercise stronger oversight of cross-border market activity, including RSCs and TSOs.
4. ACER should have a strong role in overseeing adequacy assessments as well as any resulting interventions by Member States to ensure security of supply.
5. There is a need to better resource ACER and ensure the independence of NRAs.

Size 1 MB
Published October 1, 2016
Found in Energy