CEER 2015 Work Programme. A EURELECTRIC response paper

Transcription

1 CEER 2015 Work Programme A EURELECTRIC response paper July 2014

2 EURELECTRIC is the voice of the electricity industry in Europe. We speak for more than 3,500 companies in power generation, distribution, and supply. We Stand For: Carbon-neutral electricity by 2050 We have committed to making Europe s electricity cleaner. To deliver, we need to make use of all low-carbon technologies: more renewables, but also clean coal and gas, and nuclear. Efficient electric technologies in transport and buildings, combined with the development of smart grids and a major push in energy efficiency play a key role in reducing fossil fuel consumption and making our electricity more sustainable. Competitive electricity for our customers We support well-functioning, distortion-free energy and carbon markets as the best way to produce electricity and reduce emissions cost-efficiently. Integrated EU-wide electricity and gas markets are also crucial to offer our customers the full benefits of liberalisation: they ensure the best use of generation resources, improve security of supply, allow full EU-wide competition, and increase customer choice. Continent-wide electricity through a coherent European approach Europe s energy and climate challenges can only be solved by European or even global policies, not incoherent national measures. Such policies should complement, not contradict each other: coherent and integrated approaches reduce costs. This will encourage effective investment to ensure a sustainable and reliable electricity supply for Europe s businesses and consumers. EURELECTRIC. Electricity for Europe. Dépôt légal: D/2014/12.105/25

3 CEER 2015 Work Programme A EURELECTRIC response paper July 2014 KEY MESSAGES We support CEER on the need to create robust retail markets in which consumers can freely shop around, get engaged, be confident that quality of service is kept at high standards and that any potential problems will be properly resolved. EURELECTRIC is a supporter of the into BEUC-CEER s 2020 Vision for European energy customers. As part of this, we highlighted how electricity suppliers are already implementing the RASP principles, to help demonstrate that the industry is committed to improving outcomes for consumers. We welcome CEER work on the role of DSO but we call for cross-fertilization with the other recent consultations and papers that investigated the role of DSOs. We would also like to highlight that the priority is relevant and useful, but not properly formulated in the work programme. We notice that there is some confusion between DSO roles and DSO tasks: the DSO role is to facilitate the market in a neutral and transparent way, not participate in it. This is especially valid when managing network and metering data. DSOs are not asking for new roles, they just need a bigger toolbox to cope with the various challenges of a more decentralised energy system, as stated in the DSO Declaration of May Another most important question is how regulators can facilitate DSOs investments and use of new instruments such as procurement of flexibility service to reinforce their existing toolbox and by the same token maintain security of supply and quality of service. We ask for more efforts tobe devoted to ensuring that the European network codes explore the synergies with Smart grids and system services for DSOs so that no additional barriers are put up to their development. In a number of countries, customers have no visibility about what they pay for, and why. We thus urge CEER and ACER to address this in their joint Market Monitoring Report. Understanding whether barriers to entry in retail energy market exist is a serious endeavour that electricity companies fully support. Retail Customers Committee Committee Chair : Marco Margheri DSO Committee Committee Chair : Peter Birkner Contact: Retail Customers: Giuseppe LORUBIO, Head of Unit [email protected] DSO: Claire COUET, Advisor [email protected]

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5 A. CEER Work Programme has 4 areas of priorities: Consumers and retail markets, the role of Distribution System Operators, new legislative/policy developments and international work. Do you support that these areas should be the priorities or should some areas be deleted and others included? Comments With regard to consumers and retail markets, we support CEER on the need to create robust retail markets in which consumers can freely shop around, get engaged, be confident that quality of service is kept at high standards and that any potential problems will be properly resolved. At the same time, robust retail markets will provide heightened choice to customers wherever retailers can freely enter the market, innovate to meet different customer expectations, and compete with their products and services on a level playing field. As far as the role of DSOs is concerned, we believe that this area of priority is relevant and useful, but not properly formulated in the work programme. We notice that there is some confusion between DSO roles and DSO tasks. The DSO role is to facilitate the market in a neutral and transparent way, not participate in it. This is especially valid when managing network and metering data. DSOs are not asking for new roles, they just need a bigger toolbox to cope with the various challenges of a more decentralised energy system. The emerging smart energy market can build on existing DSO roles before we consider new legal requirements and frameworks at EU level. CEER should avoid adding unnecessary complexity to a system when we don t know yet its final design and value to customers. The most important question is how regulators can facilitate DSOs investments and use of new instruments such as procurement of flexibility service to for reinforce their existing toolbox. B. Within each priority area, do you think the Work Programme focuses on the right deliverables or should some be added or deleted? B1 Regarding priority area 1: Consumers and retail markets The WP broadly focuses on the right deliverables. However, EURELECTRIC would be pleased to see CEER investigating into the issue of what pushes energy and in particular electricity bills up, to enhance transparency and provide a sound basis for future regulatory actions. Our recent analysis of electricity bills What really drives your bills up shows that the share of taxes and levies (or policy support costs) in the final electricity prices has hugely increased over the past 5 years across Europe, dwarfing the benefits brought by heightened competition at the wholesale level. It also shows that in some countries the current reporting methodology artificially inflates the network 5

6 component in the final bills. Therefore, it would be particularly useful that EU regulators undertake such an analysis. B2 Regarding priority area 2: The role of Distribution System Operators The European Commission (EC) published a report on the role of DSOs in a smart grid environment elaborated by ECN-ECORYS, and the EC Smart Grid Task Force Expert Group 3 is currently considering some of these issues, so it would be efficient to ensure that the CEER work complements these initiatives. A very important part of the DSO role is data handling. Data will be crucial for DSOs not only to fulfil their mission and maintain quality of service and security of supply in the context of higher share of renewables but also to facilitate retail market competition and provision of services by new entrants as they are already doing today. CEER should consider the benefits DSOs can bring today and will bring tomorrow to the development and evolution of the energy markets, to the development of demand response and to energy policies at large instead as analysing their role as if it was an obstacle. We believe that the number one deliverable for regulators within this priority area should be to review DSO remuneration schemes and network tariff structures. Adequate DSO remuneration schemes are essential because they have an influence on investments. Current distribution remuneration schemes focus principally on improving efficiency, they are not effective for incentivizing innovative investments or procurement of flexibility. EURELECTRIC calls NRAs to ensure that DSOs network tariff structures allow for the full transparency of costs for consumers, prosumers and generators connected at the distribution level. According to EURELECTRIC, an appropriate approach would consider the inclusion of more capacity oriented network tariffs to ensure improved efficiencies in the use of the network and to avoid cross-subsidisation and free riding. Currently, network tariffs for households and small businesses in most countries are almost entirely based on energy volume (kwh), whereas, network costs are mainly capacity driven. Most grid costs are fixed, so the grid tariffs should be composed mostly of a capacity element (kw) instead of an energy element (kwh). Also, we would like to emphasise that greater coordination among TSOs and DSOs is key for the necessary changes in distribution networks to occur in a secure and efficient way. More efforts should be devoted to ensuring that the European network codes explore the synergies with Smart grids and system services for DSOs so that no additional barriers are put up to their development. 6

7 B3 Regarding priority area 3: New legislative/policy developments It is not clear from the draft work programme which deliverables fall in this area. B4 Regarding priority area 4: International work C. On the individual CEER deliverables in Section 5 C1 Consumer: Position Paper on retail market competition Retail market competition is at the heart of the 2020 CEER Vision for European energy customers. This strategic/high level paper will develop CEER s views on what characterises a well-functioning retail market and what can be done to deliver this in practice. It will follow up regulators reflections in the ACER Bridge to 2025 as well as the EC Communication on energy retail markets expected in September It will serve also as a background document to CEER s other activities on retail markets and consumers, in particular the benchmarking report on how to remove barriers to entry in retail energy markets. Important EURELECTRIC very much appreciated the opportunity to provide input to BEUC-CEER s 2020 Vision for European energy customers. As part of this, we highlighted how electricity suppliers in member states are already implementing the RASP principles, to help demonstrate that the industry is committed to improving outcomes for consumers. With respect to how CEER uses its 2020 Vision, given the extent of consultation and time in development, it would seem sensible for CEER to use this as a basis for its further engagement on the development of retail electricity markets. C2 Consumer: Update of the 3-year rolling action plan for the implementation of the CEER-BEUC 2020 Vision National Regulatory Authorities through CEER will further develop the CEER-BEUC Vision principles into practical actions as to how the future regulatory framework might evolve to enable retail market developments across Member States while continuing to protect and empower consumers. Important 7

8 EURELECTRIC supports the 2020 Consumer Vision. Both the association and its members are working towards turning it into concrete actions see our recent contribution to the CEER 2014 Customer Conference as well as our December 2013 paper "Translating the 2020 Vision for Europe s energy customers into reality" C3 Consumer: Customer billing information - A CEER benchmarking report on the implementation of Article 10 of the Energy Efficiency Directive This benchmarking report will look at the level of implementation of Article 10 and annex VII of the Energy Efficiency Directive (2012/27/EU), regarding the provision of accurate billing information based on actual consumption Important We appreciate the fact that CEER will devolve resources to understanding the level of implementation of Article 10 of the EED and are hopeful that CEER are able to track Member States views as what constitutes billing information. We would also like to highlight that bills are neither the only nor the primary vehicle to provide billing information to customers, and that information on consumption including historic records is already made available by suppliers via multiple channels (e.g. their websites, smartphone/tablet apps, mail post). Further regulation in this field is unnecessary. C4 Consumer: Consumer protection and empowerment chapter of the ACER-CEER Market Monitoring Report As part of the European regulators Market Monitoring report, CEER will undertake the section addressing the functioning of the retail markets from the customer perspective. Very important We recommend NRAs to ensure that the data used in the Market Monitoring report are aligned with those they use at national level. Furthermore, we recall that any data should be presented in an objective way. 8

9 In a number of countries, customers have no visibility about what they pay for, and why. We thus urge CEER and ACER to address this in their joint Market Monitoring Report. EURELECTRIC supports the idea that bills should not only be based on actual consumption once a year as mandated for by the EED but also be transparent with a breakdown of cost-components, including energy supply costs, network costs, taxes and policy support costs. C5 Consumer: Status review on the implementation of CEER GGP on Price Comparison Tools In 2012, CEER issued Guidelines of Good Practice (GGPs) on Price Comparison Tools (PCT). We aim to collect information on whether and how the GGPs have been implemented. The goal is to enhance our understanding of the role of PCTs by doing fact-finding, to evaluate the impact of the GGP and to fill in any gaps in the GGP which have proven to be an issue in some countries. Very important On top of evaluating whether the 2012 GPP on PCTs have been implemented or not, CEER should urge its members to critically assess whether the PCTs operating in their jurisdiction are used as an unregulated sales channel not subject to any scrutiny. EURELECTRIC has come across commercial PCTs i.e. those not taken care of by the NRAs/consumer associations/industry bodies that have the potential to mislead customers, ultimately leading to customers losing trust in the market. We believe PCTs should be quality-proof, i.e. accurate and objective. To this end, EURELECTRIC proposes that they are certified e.g. with a 'trust mark' (label) from the energy regulator or a competent consumer organisation. The 2012 GPP clarified that any commission paid by suppliers should not influence the ranking of an offer or the consistency of information. Whilst we agree on this point, we call for greater transparency of PCTs commissions and ask that wherever PCTs charge a commission to suppliers this information including the actual amount of the commission should be clearly stated. C6 Consumer: Benchmarking Report on (how to remove) commercial barriers to supplier switching in retail energy markets Practices in energy retail markets differ significantly between Member States. In some cases, we see that in theory supplier switching is easy and effortless, but in practice energy customers are confronted with many barriers when they want to switch suppliers (eg. contracts where some promised discounts are no longer valid; high cancellation fees). We will examine the evidence of these de-facto barriers to switching, evaluate their impact on customer perception and on market dynamics. Important 9

10 Will you participate in the workshop? Yes Will you participate in the public consultation? Yes We urge CEER to work on all barriers to supplier switching instead of narrowly focusing on commercial barriers since barriers span commercial and non-commercial, i.e. technical and regulatory. When it comes to commercial barriers, we remind that notice periods and (in some instances) exit fees are common features across service markets e.g. mobile phones, internet, banking/insurance that are justified by the offers' structure, e.g. a supplier is able to offer a discount on its contract if a client engages for a fixed period since this allows for sourcing and hedging at lower costs. Finally, we caution against considering switching as the only indicator of market functioning: customers do not switch for a lot of reasons, e.g. they perceive switching as complex; they are satisfied with their current supplier; etc. C7 Consumer: Benchmarking report on how to remove barriers to entry in EU retail energy markets In order to promote enhanced retail competition in the European energy markets, the report aims to identify barriers to entry into retail gas and electricity markets across EU as well as the legal and regulatory framework that has been put in place or has been envisaged to remove them. The report will include the phasing out of regulated end-user prices and the measures taken regarding the unbundling of Distribution System Operators as part of vertically-integrated companies. It will consider barriers at both national and cross-border levels. The scope will cover retail supply markets only (i.e. retailers/suppliers). It will not cover the market for demand response (e.g. aggregators). As a second step, this report will be used to develop Guidelines of Good Practice that will be submitted for public consultation. Very important Will you participate in the workshop? Yes Understanding whether barriers to entry in retail energy market exist is a serious endeavour that electricity companies fully support. We are keen to enter into a constructive dialogue with CEER on how to identify such barriers (including those stemming from regulation/legislation) and, if necessary, remove them. Furthermore, we would urge CEER to ensure that in conducting its activities through 2015 it does so in a manner which complements any investigations ongoing in individual Member States, most notably the Competition and Markets Authority (CMA) full investigation of the energy market in Great Britain. 10

11 C8 Consumer: Case studies and benchmarking report following CEER Advice on Data Management for Better Retail Market Functioning in Electricity and Gas The objective is to understand how consumers can be provided in practice with easily understandable information on their individual energy consumption and associated opportunities, such as breakdown of energy usage by appliance in order to save money and to contribute to energy efficiency and market competition. Important Will you participate in the workshop? Yes EURELECTRIC supports the work from CEER on data and data management and reminds that other (non -energy) authorities deal with some aspects of data management. We believe that while technical features of data management (e.g. formats, data flows/exchanges) are indeed the remit of regulators, the way data is made available to customers and used to create new services and products should be left open to the market to be sorted out, e.g. the proposed breakdown of energy usage by appliance is unnecessary and will hinder innovation. EURELECTRIC also wishes to emphasise that DSOs have a long experience in data management: collecting, validating, managing and providing data in order to guarantee security of supply and quality of service, as well as providing support to market activities. In some countries, DSOs are already making data available in a free and nondiscriminatory way, in order to enable energy efficiency and market services. Smart meters, generating more data than today s analog meters, are leading to an evolution in the DSOs role, not a revolution. In the near future, smart meters could help empower consumers by providing them with accurate information on their own consumption patterns. The increased data flow means more opportunity to make use of data, and the need to develop new and flexible technical solutions to manage these larger quantities of data, while guaranteeing data security and consumers privacy. C9 Electricity: CEER Status Review on the treatment of electricity interconnectors and neighbouring generation in capacity remuneration mechanisms The Status Review will provide the European energy regulators' views on the key principles of the treatment of interconnectors and neighbouring generation in capacity remuneration mechanisms. Moreover, this document could serve as the basis for any future discussions and considerations of respective legislative measures in the EU and/or Member States in relation to assessment of generation adequacy. 11

12 Important Capacity markets should result from a coordinated effort to establish regional instead of national models in the short/medium term. To guarantee this evolution, there should be a push for harmonised solutions and Member States should coordinate among themselves and adopt market-based mechanisms that allow cross-border participation. The preferred approach would be to adopt the same model at regional level or at minimum to introduce market-based mechanisms at national level with cross-border participation. Cross-border participation and a seamless cooperation of TSOs will therefore be a cornerstone of the introduction of capacity markets. Capacity markets should be taken into consideration when planning system operation across Europe. C10 Electricity: CEER report on the implications of integrating renewable energy This paper will consider the consequences of the new Energy and Environment State Aid Guidelines for renewable energy across Europe, particularly in relation to market integration, the bidding/auctioning processes, the new tariff proposals (e.g. feed-in replaced by premium), costs and benefits of the new support schemes and cooperation mechanisms. Important EURELECTRIC believes that renewables are central to Europe s ambitious decarbonisation agenda. RES technologies are more and more deployed and become more cost-efficient and technically mature over time. Competition grows and authorities should promote an appropriate evolution of support mechanisms and adjust them to new circumstances without compromising security of investment. A progressive move towards more market based schemes is crucial in order to ensure that a large part of mature RES technologies is integrated into the market. Without putting RES into question, it will, on the contrary, increase their competitiveness, lower production costs, contribute to improved forecasts, thus lower overall system costs, and can further promote aggregators for direct marketing. RES producers have thus to be exposed to market signals, so that they are built for a real demand, can provide reliable production and contribute to regulating the system. Furthermore, RES support schemes should be designed in such a way that they do not interfere with the operation/dispatching decisions. Income stability may also better be achieved by non-energy related subsidies, for instance, support for capital investment ( /MW) instead of produced energy ( /MWh). 12

13 Beyond support schemes, CEER should also investigate the implications of integrating RES for the (distribution) grid and electricity infrastructure. C11 Gas: Monitoring Report on the implementation of Guidelines of Good Practice for Storage System Operators for Capacity Allocation Mechanisms and Congestion Management Principles - follow up In 2011, CEER published Guidelines of Good Practice for Storage System Operators (GGPSSO) for capacity allocation mechanisms and congestion management principles. As a next step, Gas Storage Europe (GSE) prepared an implementation plan and security system operators started the implementation. CEER will monitor the implementation of the GGPSSO in C12 Gas: Monitoring Report on the implementation of GSE Transparency Template Follow-up In 2013, GSE drafted - in close cooperation with CEER - a Transparency Template. The 23rd Madrid Forum invited CEER to monitor the implementation of the Template. C13 Gas: Status Review of new uses of LNG A review of the new uses of Liquefied Naturla gas (LNG). Will you participate in the workshop? Will you participate in the public consultation? C14 Cross sectoral: CEER Report on the future role of DSOs CEER plans to issue a consultation paper on the role of DSOs in late The final report will be completed in 2015 (including an evaluation of responses to the Consultation Paper). Very important 13

14 Will you participate in the public consultation? Yes It is crucial that this consultation builds on the other recent consultations and papers that investigated the role of DSOs (Commission s consultation on retail energy market; ACER consultation on European Energy Regulation bridge to 2025; CEER consultations on data management and demand-side flexibility) as well as the answers to these consultations given by key energy actors. This consultation should not not focus on trying to define new roles, adding complexity and costs that would eventually be translated into higher cost or less offers for the customer. Unbundling rules from the 2nd and 3rd Directive are into force, being monitored and enforced by NRAs to ensure non-discriminatory behaviour. This legal framework efficiently ensures the non-discriminatory behaviour of DSOs as neutral actors in the market in charge of security of supply and quality of grid-related services. It is necessary to make sure that these requirements are correctly monitored and implemented before considering any new rules. EURELECTRIC believes that ACER/CEER should primarily focus on developing a menu of different options for DSO cost recovery (remuneration schemes). As neutral and well regulated entities DSOs today already facilitate the market and provide a level playing field for all market parties and will continue these tasks in the future smart energy system. Ensuring the wider stability and predictability of regulatory regimes for networks is key for making the upcoming necessary distribution network investments. The stability and predictability of regulatory regimes for networks have a strong impact on investors assessment of DSOs investibility. C15 Cross sectoral: 6th Benchmarking Report on Quality of Supply The report aims to present an overview and analysis of current practices in CEER member countries, as well as an assessment of areas where a move towards harmonisation could further improve quality of supply and consequently electricity and gas markets. This is the 6th report of a series and this year it will also include gas, and also cover the ECRB and MEDREG countries. Very important EURELECTRIC welcomes CEER s initiative to gather data on quality of distribution services across Europe, however the consultation on regulating the quality of distribution services does not provide a sound basis for future CEER recommendations given that the questionnaire lacked clarity and the multiple choice questions were not suitable for this complex topic. 14

15 Ensuring quality of supply is a very important task of European DSOs, which they fulfil with their different rules, terms, concepts and procedures. Harmonization at EU level will not help DSOs achieve their objectives, which reflect the specific requirements of their national markets. Facilitating DSO investments, driven by an increased and accelerated integration of distributed energy resources, is the right priority area for CEER in order to help DSOs maintain security of supply and quality of service. A key element to facilitate investments is long term regulatory stability. D. Additional general comments EURELECTRIC recommends a number of useful reports in light of CEER announced work programme: EURELECTRIC Response to ACER consultation on European Energy Regulation: A bridge to 2025 EURELECTRIC Response to CEER Draft Advice on Data Management for Better Retail Market Functioning The Retail (R)evolution Power to the Customer DSO Declaration May 2014 Electricity Distribution Investments what regulatory framework do we need? Study on What really drives your bill up? Report on innovation: Utilities: Powerhouses of Innovation 15

16 EURELECTRIC pursues in all its activities the application of the following sustainable development values: Economic Development Growth, added-value, efficiency Environmental Leadership Commitment, innovation, pro-activeness Social Responsibility Transparency, ethics, accountability

17 Union of the Electricity Industry - EURELECTRIC aisbl Boulevard de l Impératrice, 66 - bte 2 B Brussels Belgium Tel: Fax: VAT: BE